Police were out on patrol from early on Friday, deployed at the entrances to the Old City as well as around the disputed mosque compound.
To minimise the chance of unrest, police imposed an age limit on those entering the compound for the Friday prayers, permitting only men over the age of 40 with a blue Jerusalem identity card to access the site.
Arab Israelis hold the same identity card as Jewish Israelis, but those living in east Jerusalem, which was occupied and annexed by Israel in 1967, hold a special residents' card.
Palestinians from the West Bank and Gaza, however, are forbidden to stay in Jerusalem or anywhere else in Israel unless they hold a special permit.
The security precautions were taken after a small Jewish group called Revava said it was intending to hold a mass prayer session on Sunday at the compound, which once housed the Jewish temple until it was destroyed by the Romans in 70 CE.
Considered the most sacred spot in Judaism, the compound is also the third-holiest site in Islam.
Police are to close access to the compound to all non-Muslims on Sunday to block the demonstration, which organisers said was a protest against Israel's planned withdrawal from the Gaza Strip this summer.
Israeli authorities fear radicals could attack the disputed mosque compound.
In a statement on Thursday, the Palestinian government said any attack on the compound "would be an aggression against the Arab and Islamic nations".
Palestinian officials have warned that any such move by Jewish extremists would cause the region to explode in violence.