About 2500 unemployed Palestinians, who previously had worked in Israel, arrived at the building early on Saturday carrying signs and demanding work.
They threw stones at the building, shattering windows, and at police forces who came to break up the demonstration. Police fired into the air to try to disperse the crowd.
Until fighting erupted between Israel and the Palestinians in September 2000, more than 100,000 Palestinians from Gaza and the West Bank worked in Israel.
The four years of violence have led to mass unemployment and increased poverty in the cash-strapped Palestinian Authority.
Abid Abu Mahdi, one of the organisers of the demonstration, said the protesters wanted jobs to provide food for their children.
He said Palestinian leader Mahmud Abbas had promised them jobs, "but so far we have nothing".
The unemployed, Abu Mahdi said, are protesting over the "miserable conditions that the Palestinian labourers must endure".
After clashes between the protesters and police, the security forces succeeded in evacuating the demonstrators from the area around the parliamentary building, witnesses said.
No one was wounded in the clash, and a group of demonstrators met parliamentary officials to discuss their demands.