Earlier on Friday, Israeli soldiers stormed the compound, firing tear gas and stun grenades at Muslim worshipers who had gathered for prayers.
"At least 50 policemen raided the Al-Qibali Mosque, attacking worshipers and arresting 20 others," Firas al-Dibs, a spokesman for al-Waqf, the Quds Religious Endowments Authority, said in a statement, Al Jazeera reported.
According to the Jordan-run body, a total of 15 Palestinians were injured, including three mosque guards, in the melee.
Al-Dibs said the Israeli authorities sealed Al-Aqsa Mosque with iron chains and prevented Palestinian worshippers from entering it.
The closure consequently led to confrontations with worshipers, Palestinian news agency Wafa reported.
Al Jazeera's Andrew Simmons, reporting from the entrance of the al-Aqsa mosque compound, said there was "a five-hour standoff with the security forces in which they surrounded the entire with barricades".
He added that there was a "very tense atmosphere" inside the compound.
"There had been an 'attack', as it was described by the custodians of this mosque's complex, who said it had been an invasion by Israeli security forces.
"However, the Israeli security forces accused some people of throwing rocks and fireworks and that was the reason that back-up was called and so many security forces opened fire with sound grenades and also tear gas at some point," added Simmons.
"People were told evacuate the whole complex but many refused, and that led to a situation whereby four gates stopping people from getting in or getting out."
The unrest coincides with the first anniversary of the Al-Aqsa protests in July 2017 when tens of thousands of Palestinians prayed outside the compound for nearly two weeks, protesting against the new metal detectors installed by Israeli authorities.
The Al-Aqsa compound is one of the most fractious issues in the Israel-Palestinian conflict.
Al-Aqsa is the name of the silver-domed mosque inside a 35-acre compound referred to as al-Haram al-Sharif, or the Noble Sanctuary, by Muslims, and as the Temple Mount by Jews.
For Muslims, the Noble Sanctuary hosts Islam's third-holiest site, the Al-Aqsa Mosque, and the Dome of the Rock, a seventh-century structure believed to be where Prophet Muhammad (PBUH) ascended to heaven.
Jews believe the compound is where the Biblical Jewish temples once stood, but Jewish law and the Israeli Rabbinate forbid Jews from entering the compound and praying there, as it is considered too holy to tread upon.
The compound's Western Wall, known as the Wailing Wall to Jews, is believed to be the last remnant of the Second Temple, while Muslims refer to it as al-Buraq Wall and believe it is where the Prophet (PBUH) tied al-Buraq, the animal upon which he ascended to the sky and spoke to God.
Israel occupied East Quds during the 1967 Middle East War. It later annexed the city in 1980, claiming it as the capital of the self-proclaimed Jewish state in a move never recognized by the international community.
In late 2000, a visit to the Al-Aqsa by controversial Israeli politician Ariel Sharon sparked a years-long popular uprising against the Israeli occupation in which thousands of Palestinians lost their lives.