As she approached the Dome of the Rock in the Haram al-Sharif (Noble Sanctuary) on Sunday, Muslim worshippers shouted: "How dare you come in here, and why are you hassling Muslims?"
As she entered the Noble Sanctuary, one man said, "None of you belongs in here."
Israeli police formed a human chain around Bush, pressing together to push away protesters.
Anti-American sentiment is running high in the Middle East over a variety of factors, including a recent magazine report - since retracted - about US soldiers desecrating the Quran.
"We in principle don't reject anyone's visit to the Al Aqsa Mosque (compound), but we see in the visit of Mrs Bush an attempt to whitewash the face of the United States, after the crimes that the American interrogators had committed when they desecrated the Quran," the Hamas movement said in a statement on its website.
US officials have said they found nothing to substantiate the Newsweek report of interrogators desecrating the Quran at the detention centre in Guantanamo Bay, Cuba.
But some remain convinced that the desecration happened and that the US government forced Newsweek to back down.
Adnan Husseini, director of the Islamic Trust that administers the Haram al-Sharif, said Bush tried to downplay the heckling, saying it could have happened anywhere.
"We see in the visit of Mrs Bush an attempt to whitewash the face of the United States, after the crimes that the American interrogators had committed when they desecrated the Quran"
Husseini said he told her he hoped President Bush would exert pressure to achieve peace in the Holy Land, for without it, "there will be no peace or stability in the area".
Earlier, Laura Bush visited the nearby Western Wall of the Haram al-Sharif, a site regarded as holy by Jews, tucking a note with a personal request to God into one of its cracks, following Jewish custom.
There, too, her visit touched off protests, with about 40 demonstrators demanding the release of convicted Israeli spy Jonathan Pollard, shouting, "Free Pollard now".
Pollard is serving a life sentence in a US prison.
The next stop was the West Bank town of Jericho, where she met eight prominent Palestinian women, including cabinet ministers and legislators.
Palestinians are subjected to
humiliation by Israeli forces
The women said they told Bush the top priority was to pressure Israel to lift travel restrictions and roadblocks that disrupt life in the Palestinian areas.
The network of roadblocks in the West Bank and Gaza Strip has meant that ordinary Palestinians are subjected to long daily waits and humiliation at the hands of Israeli occupation forces.
The women, including legislator Hanan Ashrawi, said they also told Bush the US had to take a more active role in trying to end Israeli occupation and creating a Palestinian state.
Separately, Aljazeera has reported that representatives of several Palestinian factions held a meeting in Damascus on Sunday.
Among those who attended was the head of Fatah, Faruk Qaddumi, and the head of the political bureau of Hamas, Khalid Mishaal.
Qaddumi said the talks focused on strengthening Palestinian unity and the role of the Palestine Liberation Organisation, while Mishaal said the meeting was consultative and meant to follow up on what had been agreed upon at the last Cairo meeting.
At the meeting, a member of the central committee of Fatah, Hani al-Hasan, called for the formation of a higher national committee made up of all Palestinian factions to follow up on Palestinian issues.