Israeli police attacked dozens of worshippers in Jerusalem's Al-Aqsa Mosque compound before dawn on Wednesday, witnesses said, in what Israeli police said was a response to rioting.
The incident sparked protests across the occupied West Bank and the Israeli military said nine rockets were fired from Gaza toward Israel after sirens blared in southern towns.
Violence in the occupied West Bank and Jerusalem has surged over the past year and there is concern that tensions could escalate this month, as the Muslim holy month of Ramadan coincides with Judaism's Passover and Christian Easter.
The Palestinian Red Crescent said seven Palestinians sustained wounds from rubber-tipped bullets and beatings in clashes with Israeli police at the Al-Aqsa Mosque compound. It added that Israeli forces were preventing its medics from reaching the mosque.
"I was sitting on a chair reciting (Qur'an)," an elderly woman told Reuters outside the mosque, struggling to catch her breath. "They hurled stun grenades, one of them hit my chest," she said as she began to cry.
Israeli police said in a statement that it was forced to enter the compound after masked agitators locked themselves inside the mosque with fireworks, sticks and stones.
"When the police entered, stones were thrown at them and fireworks were fired from inside the mosque by a large group of agitators," the statement said, adding that a police officer was wounded in the leg.
Friction at the Al-Aqsa Mosque compound, known to Jews as the Temple Mount, has set off violence in recent years.
Palestinian groups condemned Israel's attacks on worshippers, which they described as a crime.
"We warn the occupation against crossing red lines at holy sites, which will lead to a big explosion," said Nabil Abu Rudeineh, spokesperson for Palestinian President Mahmoud Abbas.
Jordan and Egypt, both involved in recent U.S.-backed efforts to de-escalate tensions between Israel and the Palestinians, issued separate statements condemning the incident.
Videos circulating on social media, which Reuters could not immediately verify, showed fireworks going off and police beating people inside the mosque.
The Israeli military said nine rockets were fired from Gaza toward Israel, of which at least four were intercepted and four landed in open areas.