At least seven people were wounded and seven arrested as clashes broke out at the Lion's Gate entrance to the Old City of Jerusalem.
Al Jazeera's Sherine Tadros, reporting from Jerusalem, said that the mosque was being protected by worshippers who wanted to stop Jewish hardliners from entering the compound.
"They are very keen that what happened in Hebron, where hardliners did in fact storm and take over a mosque there, doesn't happen here in this very holy site," she said
She said that there was a lot of tension in the city because of the standoff.
"It could, of course, boil over if we hear of clashes between the police and those at the sit-in at the al-Aqsa compound," she said.
Palestinian officials told Al Jazeera that Muslim worshippers entered the mosque late on Saturday to prevent a repeat of last Sunday's clashes in the area.
In that incident, at least 13 Palestinians were injured and seven detained when fighting broke when Israeli Jews apparently attempted to enter the mosque.
Police fired tear gas and stun grenades at hundreds of Palestinians, while stones, chairs and other objects were reportedly thrown.
Israeli version
Describing the latest clashes, Shmuel Ben-Ruby, the Israeli police spokesman for Jerusalem, said that about 150 demonstrators were dispersed from one area near the al-Aqsa compound on Sunday, but unrest was continuing in nearby East Jerusalem.
He said some had thrown bottles and rocks.
Micky Rosenfeld, another Israeli police spokesman, confirmed that the compound had been "shut to visitors" this week.
He said that Israeli authorities had also detained Khatem Abdel Khader, an adviser to the Palestinian prime minister on Jerusalem affairs, on suspicion he was trying to incite protests at the site.
Israeli security forces have said that the restrictions will stay in place until the Palestinian protesters turn themselves to authorities.
Israel captured and annexed the Old City with its holy sites, along with the rest of Arab East Jerusalem and the West Bank, in the war of 1967.
