This year's event was dedicated to unrecognised Beduin villages in the Negev desert of southern Israel, which lack basic services and are threatened with demolition, but unlike previous years there was no general strike planned.
The day has been observed by Israel's large Palestinian minority of 1.2 million each year since six Palestinians with Israeli citizenship were killed in clashes with security forces following a government decision to expropriate land in the Galilee in 1976.
Wednesday's commemoration, which in the past has supported the Palestinian uprising against Israel, comes as Israel and Palestinian resistance fighters are observing a de facto truce on the ground.
A central rally was to be held in Abu Tulul, an unrecognised Beduin village that is home to 3000 people in the Negev desert, while parades and commemorations was also to take place in the northern Galilee region.
Tens of thousands of people live in scores of similar communities throughout the Negev that lack basic amenities such as water and electricity because they are not officially recognised as residential areas by the state.
Protestors clashed with Israeli
Arab Israeli MP Talib al-Sana had said Land Day rallies were to protest against the government's decision to seize land in 45 Bedouin villages in the Negev.
Elsewhere in the West Bank and Gaza Strip, Israeli occupation forces fired on protesters marking Land Day.
"Living conditions in these villages are worse than in Palestinian refugee camps, and we're talking about Israeli citizens. They don't have water or electricity," Sana said.
More than 1000 people planted olive trees in the villages, mayor of Kfar Kura, Hussein Rafaya, said.
The Abu Tulul rally also was in protest against proposals that Palestinians with Israeli citizenship should do national service in return for receiving all their rights.
"We are not holding a general strike because it is a means and not an end in itself"
Land Day rally organiser
Palestinian leaders in Israel charge that demolition orders hang over about 50,000 Arab-Israeli homes, including 30,000 in the Negev.
They demand that full equality is their basic right as citizens of Israel and should not be dependent on any form of national service, which they have said is tantamount to military service.
"We are not holding a general strike because it is a means and not an end in itself," spokesman Abid Inbitawi said.
Instead, Palestinians in Israel wanted to hold dignified, legal and democratic protests against the demolition orders, he said.
The event focused on the rights
of Beduins living in Israel
Thousands of Jewish pacifists and members of left-wing Israeli groups were also expected in Abu Tulul to show solidarity with their Palestinian compatriots.
Last year's Land Day was marked by protests against Israel's assassination of the spiritual leader of Hamas, Shaikh Ahmad Yassin, in Gaza City.
Palestinians in Israel are the descendants of 160,000 Palestinians who stayed in their homes after the state of Israel was created in 1948.
Beduins make up about 10% of the Palestinian population in Israel, living for the most part in the Negev and Galilee.