Tense calm prevailed in the Old City by the end of the day.
Day of Anger
A "day of anger" on the Muslim day of rest had been called by Tayssir al-Tamimi, the Palestinian chief justice, who on Tuesday called for "all Palestinians to go and protect al-Aqsa against Israeli plans that aim to destroy the mosque".
On Friday Palestinians hurled stones, bottles and rubbish in outrage over what Israel says is renovation work.
"The daily teachings of suffering and hatred must be replaced with tolerance and co-existence"
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Israeli police streamed on to the hilltop compound known to Muslims as the Haram al-Sharif and to Jews as the Temple Mount, to try to quell what Micky Rosenfeld, an Israeli police spokesman, called Muslims rioting over the repair work.
Clouds of tear gas rose up at the holy site and stun grenades set off sharp booms.
Twenty Palestinians were treated for injuries, a Palestinian medical source said. Witnesses said police arrested a number of people.
Mike Hanna, Al Jazeera's correspondent, said tear-gas shells and rubber-coated bullets were fired in different areas of the Old City, injuring a number of people.
Dr Khalil el-Baba, a doctor treating some of the injured, also said Israeli officers fired rubber-coated steel bullets.
Israeli police denied this.
Friday prayers
Sheikh Mohammed Hussein, the Jerusalem mufti, who delivered the main Friday sermon, criticised what he called Israel's "aggression".
He said: "We condemn this blatant Israeli aggression against al-Aqsa mosque and on the worshippers."
Thousands of Palestinians had attended prayers at the mosque and heard him criticise the current Israeli works.
Israel is "Judaizing Jerusalem", he declared, urging Muslims throughout the world to "protect" occupied East Jerusalem and the mosque esplanade.
Jacky Rowland, Al Jazeera's correspondent, said the mufti issued calls for calm over the mosque's loudspeaker system, normally used for the call to prayer.
Stun grenades
Maher al-Ami, a journalist for Jerusalem's al-Quds newspaper, said: "We were at Friday prayers and suddenly they [the Israelis] began to shout and throw stun grenades."
Adnan Husseini, director of the Muslim organisation Waqf, said: 'We are surrounded. There is one gate still open but they [the Israelis] won't let anyone leave."
Rosenfeld said: "Seventeen policemen were hurt, nine of them taken to hospital. Seventeen Arab rioters were arrested and police are in full control.
"Around 150 worshippers are now leaving in peace and quiet after dialogue between police and Muslim representatives."
Heavy deployment
Israel had deployed 3,000 police officers around Jerusalem's Old City in advance of Muslim prayers at the mosque compound, amid widespread Arab anger over Israeli excavation work nearby.
Ilan Franco, Jerusalem police chief, said officers were posted on Friday amid "intelligence indications" that disturbances could erupt.
Arab states say the work could damage the foundations of the mosque, the
Speaking in Saudi Arabia, a day after striking a Palestinian unity government deal, Mahmoud Abbas, the president, said the Israeli works amounted to "hostile measures".
Israeli authorities say the building work, begun on Tuesday, is being carried out to replace a centuries-old ramp 60 metres away.
A controversial visit to the mosque compound in 2000 by Ariel Sharon, then leader of the Israeli opposition, sparked the most recent intifada.