Police did not say when the restrictions would be lifted.
Authorities have also tightened restrictions on access to Israel from the occupied West Bank, closing checkpoints to general traffic, with exceptions for medical cases, humanitarian aid, and professionals and students with permits.
Holy City unrest
The restrictions on the occupied West Bank will be lifted on April 6 after the conclusion of Passover, when Jews commemorate their biblical exodus from Egypt.
Israel usually locks down the West Bank during Jewish holidays and has been especially wary in recent months as Palestinians have clashed with security forces in and around Jerusalem's al-Aqsa mosque compound on a number of occasions.
Jerusalem has been rocked in past weeks by the worst unrest in years, triggered largely by rumours that a rebuilt 17th-century synagogue was part of a plan by Jewish extremists to destroy the famed al-Aqsa mosque.
Dozens of people were wounded in September and again this month when violence broke out following rumours that Jewish extremists intended to pray at the compound.
Nissim Edri, a Jerusalem police intelligence officer, said security forces were ready for any attempt by Jewish extremists to march to the site or by Muslim activists to whip up anti-Israeli fervour.
"Thousands of police ... are deployed throughout the city," Edri told Israeli public radio on Sunday.
Security was particularly tight around the al-Aqsa compound, the third holiest site in Islam, and the holiest for Jews, who call it the Temple Mount.
Muslims are sensitive to any perceived change in the status quo of the compound and many believe Jews are determined to build a new temple on the wide esplanade, the site of the Second Temple destroyed by the Romans in 70 AD.
Jewish fringe groups have vowed to build a third Temple, but Israeli political and religious authorities have repeatedly dismissed the idea.
Travel restrictions placed on the West Bank came after leaders from the Arab world met in Sirte, Libya for the 22nd Arab League summit.
Arab leaders expressed their total rejection of Israel's settlement policy in occupied East Jerusalem at the end of the two-day meeting, saying it poses "a dangerous obstacle to a just and comprehensive peace process".
However, they failed to reach consensus on whether the Palestinians should resume stalled talks with Israel, rejecting pressure from Syria and Libya for the Palestinians to abandon talks with Israel and resume armed resistance.
Jerusalem was also a principle focus of the summit after Arab foreign ministers agreed to raise $500m in aid to improve the living conditions for Palestinians in the city.