Shaikh Hasan Yusuf, who was recently released from Israeli prison, was not entitled to enter occupied east Jerusalem on Sunday.
Thousands of Palestinians have gathered inside the al-Aqsa mosque since Saturday night to protect al-Haram al-Sharif, or the Noble Sanctuary, from an Israeli extreme-right group that threatened to march on it.
"Around 15,000 Palestinian worshippers have prayed the dawn prayer here," Yusuf told Aljazeera on Sunday. He said 3000 had spent the night there.
"We call on Arab and Islamic nations and all people to immediately move to save the blessed al-Aqsa mosque," he said. "This is our soul, and a body can never live without a soul."
Yusuf said the gathering would continue indefinitely.
"We have announced there is an open sit-in. The battle will not end in hours or days. We have called on all our people in Jerusalem and the land occupied in 1948 to head towards al-Aqsa mosque," he said.
On Sunday morning, only a handful of rightist Jews had arrived, Reuters reported.
Revava, a far-right group, had urged followers to flock to the site revered by Jews as the Temple Mount at 7.30am (0430 GMT). The nearby Western Wall was set as the rendezvous area.
Young Palestinians rest inside
the al-Aqsa mosque compound
Although several dozen Jews attended morning prayers at the wall, there was no sign of an organised march up to the mosque. Israel's Army Radio said police, out in force to bar the Revava rally, arrested three leaders of the group at the wall.
"Given assessments that such a move on the Temple Mount may spark a flare-up and disturbances from worshippers there, this (ban) is final and non-negotiable," Jerusalem police chief Ilan Franco told Army Radio.
Thousands of Israeli police had encircled Jerusalem's Old City on Sunday, stopping cars and setting up roadblocks in an attempt to prevent the march.
Palestinian groups threatened to abandon a de facto ceasefire with Israel if the right-wing Jews went ahead with the march.
On Saturday, Islamic Jihad leader Muhammad al-Hindi warned that "touching the Al-Aqsa mosque would set the entire region alight".
The al-Aqsa mosque has been the target of several acts of arson and vandalism by Jewish extremists.
In 1969, a Christian Zionist set fire to the Minbar of Salah al-Din.
A few years later, American Jewish extremist Allen Goodman attacked Muslim worshippers in the mosque, killing and injuring scores.
In the late 1970s, a group of Jewish activists tried unsuccessfully to attack and destroy the al-Aqsa mosque and the nearby Dome of the Rock mosque using weapons stolen from Israeli soldiers.
The men told interrogators they had hoped the destruction of the Islamic edifice would trigger violence and bloodshed on such a scale it would induce the appearance of the the Jewish messiah, who would bring about salvation for the Jewish people and rule the world from Jerusalem.