In an annual procession that Palestinians view as provocative, Israeli nationalists were scheduled to march through the Muslim neighbourhood of the Old City to commemorate the 1967 conquest of East Jerusalem.
What is Jerusalem Day?
During the 1967 war, Israel fought a number of Arab armies and captured territories including East Jerusalem.
Israel has since annexed East Jerusalem in a move that has not been recognised internationally, and considers the entire city to be its everlasting and undivided capital.
Palestinians want East Jerusalem to be the capital of a future Palestinian state.
The day's celebrations conclude in a flag-waving march through downtown Jerusalem before entering the fortified Old City, which is home to Christian, Jewish, and Muslim holy sites.
In recent years, the parade has become a show of force by Jewish nationalists and a blatant provocation aimed at undermining Palestinian links to the city for Palestinians.s
Why has it caused tensions with Palestinians?
The heavily-policed procession through the Old City of Damascus has caused tension between Palestinians and Arab shopkeepers, as well as Jewish pilgrims visiting the Al-Aqsa mosque compound.
Palestinians say the visits are an Israeli attempt to encroach on one of the few places in the city where they feel a degree of sovereignty, while Muslims say Jewish visitors are violating a decades-old ban on non-Muslim worship. Israel maintains the status quo.
How has the event led to violence in recent years?
Hamas has warned of an "explosion" if right-wing marchers violate the status quo at the Al-Aqsa mosque compound or attack Palestinians.
Palestinians have also organised flag marches in the Israeli-occupied West Bank and Gaza, with some processions set to take place near the Israel-Gaza separation fence.