“The special sensitivity of the Temple Mount cannot be overstated,” Judge Einat Avman-Moller said in her ruling on Wednesday, using the Hebrew name for the compound.
The judge said Jewish worship there “should be superseded by other interests, among them the safeguarding of public order”.
Earlier this week, a magistrate court ruled in favour of three Jewish appellants who had been banned from the Old City by police for 15 days for praying at the site, stirring Palestinian fears of attempts to change the sensitive status quo at the site.
The Al-Aqsa Mosque compound is located inside the landmark Old City. The vast majority of the international community does not recognise Israeli sovereignty over East Jerusalem and considers it illegally occupied territory.
The compound is one of the holiest sites in Islam and is referred to as al-Haram al-Sharif, or the Noble Sanctuary. According to an agreement in place since 1967, non-Muslims are allowed onto the site during visiting hours, but they are barred from praying there.
Jews believe the 35-acre compound is where the biblical Jewish temples once stood. Based on traditional Jewish religious law restricting entry into the site, and the agreed-upon status quo of the compound, Israel allows Jews to visit on condition they refrain from praying there.
Removing the ban on Sunday, magistrate court Judge Zion Saharai said that while he had no intention of interfering in law enforcement at the site, the conduct of the three appellants “does not raise worry of harm befalling national security, public safety or individual security”.
Magistrate’s courts can be overturned by district courts, with Israel’s Supreme Court a final course of appeal.
Palestinian Authority President Mahmoud Abbas issued a statement calling Sunday’s ruling “a grave assault against the historic status quo … and a flagrant challenge to international law”.
Israeli police repeatedly raided the Al-Aqsa Mosque compound during the Muslim fasting month of Ramadan this year, which coincided with the Jewish Passover festival, in order to provide protection for settler visits. Hundreds of Palestinians were wounded and arrested.
At least 16,000 Israelis are expected to participate in an annual “flag march” in and around the Old City, marking its occupation by Israel in the 1967 Arab-Israeli war. The march will encompass the Muslim quarter and include the Damascus Gate, where Palestinians tend to gather, stoking fears of further tensions.
Palestinians view the march as provocative as Jewish settlers flaunt their “sovereignty” over the occupied territory. Previous marches have included Israeli chants of “Death to Arabs” and attacks on Palestinian homes and shops in the Old City.
Palestinian armed groups in the besieged Gaza Strip, including Hamas, have warned that such events are “adding fuel to the fire”. Last year, Hamas and the Palestinian Islamic Jihad (PIJ) underwent an 11-day war with Israel over attempts to forcibly displace Palestinians in Jerusalem and raids on the Al-Aqsa Mosque compound.