"Demonstrators threw rocks and fireworks at police, who used anti-disturbance measures to disperse them," police spokeswoman Luba Samri said.
"Apparently one Palestinian was wounded," she said.
However, Palestinian sources put the number of casualties at three, saying one person was taken to hospital after being hit in the head.
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The Al-Aqsa mosque compound in the Old City, a site holy to Jews and Muslims, has been the focus of months of unrest that recently spread to the occupied West Bank and Arab communities across Israel and raised fears of a new Palestinian uprising.
Palestinians have been infuriated by a far-right Jewish campaign for prayer rights at Al-Aqsa that threatens an ultra-sensitive, decades-old status quo that allows only Muslims to pray there.
But Israeli Prime Minister Benjamin Netanyahu reiterated in a Thursday meeting with US Secretary of State John Kerry and Jordanian King Abdullah II that status quo, which allows Jews to visit but not pray, would not change.
On Friday, as part of a deal reached at the meeting in Amman, Israel lifted restrictions on Muslims praying at the mosque.
For the first time in months, men of all ages were allowed entry for the main weekly Muslim prayers at Al-Aqsa.