Representatives of the Palestinian Red Crescent say several of the injured Palestinians had been hit in the head and in the eyes by the rubber-coated ammunition fired by the police.
The clash began at the end of Friday prayer - which was the last of this year's fasting month, Ramadan.
Riots and violence have taken place almost every night during Ramadan in Jerusalem - a city that is sacred to Muslims, Christians and Jews and houses sacred sites such as the Al-Aqsa Mosque, the Temple Mount, the Wailing Wall and the Church of the Holy Sepulcher.
Earlier on Friday, Israeli border police in the West Bank announced that they had shot dead two Palestinians and injured a third after they were attacked by the Palestinians.