At least three people have been killed in a stabbing attack near Tel Aviv, Israeli medics said.
Police said they suspect it was a militant attack and that the killer fled in a vehicle.
Security forces set up road blocks in the area around where the stabbings occurred, in the town of Elad, and a helicopter could be seen hovering over the area.
The Magen David Adom emergency service said three people were killed and four others were wounded, two of whom were in serious condition.
The Palestinian militant group Hamas, which rules the Gaza Strip, praised the attack and linked it to violence at a holy site in Jerusalem but did not claim responsibility for it.
“The storming of Al-Aqsa Mosque can’t go unpunished,” Hamas spokesman Hazem Qassem said. “The heroic operation in Tel Aviv is a practical translation of what the resistance had warned against.”
Israel marked its Independence Day on Thursday, a festive national holiday in which people typically hold barbecues and attend air shows.
Israeli-Palestinian tensions have soared in recent weeks, following a series of attacks in Israel, military operations in the occupied West Bank and violence at the holy site in Jerusalem.
The Al-Aqsa Mosque compound is the third holiest site in Islam and is built on a hilltop that is the holiest site for Jews, who refer to it as the Temple Mount.
It lies at the emotional heart of the conflict, and Palestinians and Israeli police have clashed there repeatedly in recent weeks.
Israeli police entered the site to clear away Palestinian protesters on Thursday, after Jewish visits that had been paused for the Muslim holidays resumed.
As the visits resumed, dozens of Palestinians gathered, chanting “God is greatest”.
Scuffles broke out when the police went to arrest one of them. Police fired rubber-coated bullets on the sprawling esplanade as some Palestinians sheltered inside the mosque.
The police could later be seen just inside an entrance to the barricaded mosque.
The police said they responded to dozens of people who were shouting incitement and throwing stones, and that one police officer was slightly injured.
The Palestinian Red Crescent emergency service said two Palestinians were taken to a hospital after being struck with batons.
Unlike in previous confrontations, Palestinian witnesses said there was no rock-throwing initially.
Some of those who sheltered inside the mosque began throwing stones and other objects when police entered the building, witnesses said.
Under informal arrangements known as the status quo, Jews are allowed to visit the site but not pray there.
In recent years, they have visited in ever-increasing numbers with police escorts and many have discreetly prayed, angering the Palestinians as well as neighbouring Jordan, which is the custodian of the site.
The Palestinians have long feared that Israel plans to eventually take over the site or partition it.
Israel says it is committed to maintaining the status quo, and accuses the Islamic militant group Hamas of inciting the recent violence.
