The prayers were attended by about 400 people, most of them regulars at the Friday weekly Muslim prayers at the mosque.
A small party of relatives, family members and close associates accompanied the body to its final resting place.
The younger brother of the late Palestinian leader died of cancer in Cairo on Wednesday at the age of 71.
A doctor by profession, he was honorary president of the Palestinian Red Crescent Society, of which he was a co-founder in 1968.
He had been fighting for his life for several weeks, and was admitted to hospital on 2 November.
Yasir Arafat's death was never
revealed to Fathi
His death came less than a month after Yasir Arafat died in a French military hospital outside Paris on 11 November.
Relatives said he was never told of his brother's death due to his condition.
A 1957 graduate of the University of Cairo, Fathi Arafat worked for many years in Egypt, Kuwait and Jordan. He helped establish the Palestinian Hospital in Cairo, and a number of medical centres in the Palestinian territories.
He leaves behind an Egyptian dentist wife and two children, Amani, head of the dentistry department at the Palestinian Hospital, and son Tariq, an engineer, like Yasir Arafat before embarking on the struggle for Palestinian statehood.