A driver has rammed his car into a crowd of pedestrians in East Jerusalem before getting out and attacking people with a metal bar - killing one and injuring 13.
The man was shot dead at the scene by police, who described the incident as a "hit-and-run terror attack".
"A commercial vehicle hit and ran over pedestrians at a light rail station," police spokeswoman Luba Samri said.
She indicated that the incident took place on the border between west and annexed East Jerusalem.
Emergency services spokesman Zaki Heller said the car had driven down the light rail tracks then ploughed into people waiting on the platform.
Police named the attacker as Palestinian Ibrahim al-Akri (38), who they said had recently been released from prison after serving time for security offences.
There was no immediate claim of responsibility by any Palestinian organisation but Hamas, the group which runs Gaza, praised the attack and called for more violence.
Hamas official Fawzi Barhoum said: "We praise this heroic operation. We call for more such...operations."
Reporter Tom Rayner is at the scene.
A similar attack took place in the same area on October 23rd.
It came as Israeli police clashed with Palestinian protesters at the city's Al-Aqsa Mosque compound, after hardline Jewish nationalists announced plans to visit the site despite weeks of soaring tensions.
Jordan announced it was recalling its ambassador to Israel in protest at the Jewish state's "violations" in Jerusalem and its holy sites.
Jordan's state news agency said the decision was taken "in protest at the increasing and unprecedented Israeli escalation in the Noble Sanctuary, and the repeated Israeli violations of Jerusalem".
Regular violence involving Israeli security forces and Palestinians in the streets of East Jerusalem and the Old City compound have increased fears of a new Palestinian Intifada, or uprising.
Israeli police said Palestinians began throwing stones and firecrackers at officers minutes before the sacred plaza, known to Jews as the Temple Mount and Muslims as the Noble Sanctuary, was to open for visitors.
The complex houses Islam's al Aqsa mosque and is where two biblical Jewish temples once stood.
Footage showed Israeli border policemen running through the compound while a group of Jewish worshippers and tourists waited outside to enter.
Police spokesman Micky Rosenfeld said: "Police entered the area, pushed the masked rioters back, and they fled back into al Aqsa. Police closed the front gate of the mosque but did not enter."