In his sermon, prayer leader Yussef Abu Sneineh called on Palestinians to stand united and guard against any blacklash from disputes between president Mahmud Abbas's Fatah party and the ruling Hamas movement.
"This people cannot split into two camps, one fighting the other, because we risk falling, may God prevent it, into the woes of a civil war," he said.
Denouncing the Israeli occupation and international pressures, he said the Palestinians were facing a "serious plot, against the people and their land".
Israeli police were deployed in force in occupied east Jerusalem to prevent any disturbances after the prayers at what is Islam's holy site but worshippers dispersed without incident.
Flocking in from the occupied West Bank and Israel, the worshippers crowded the narrow lanes leading to the mosque in the heart of Jerusalem.
As every Friday in Ramadan, the Israeli authorities allow West Bank men older than 45 and women over 35 into Jerusalem to pray, said Shlomo Dror, spokesman for the coordinator of government activities in the territories.
Many worshippers arrived very early at the Qalandiya checkpoint, between the West Bank political capital of Ramallah and Jerusalem, and another that controls access to the holy city from the south, AFP journalists said.
Very few Palestinians living in the occupied West Bank are normally granted Israeli permits allowing them to travel to east Jerusalem.
At the Bethlehem checkpoint to the south, clashes broke out between Israeli soldiers and hundreds of Palestinians who demonstrated after being prevented from getting to Jerusalem in order to pray at the mosque.
Seven Palestinians were wounded when Israeli forces fired tear gas and rubber bullets to break-up the protest, witnesses and emergency workers said.
The Islamic Movement in Israel said tens of thousands of worshippers from Arab districts inside the Jewish state arrived in Jerusalem for the prayers.
The last Friday of Ramadan, called the Orphan, attracts a record number of worshippers to the Al-Aqsa mosque each year.

Copyright AFP (Agence France-Presse), 2006