At least three people have been killed in a stabbing attack near Tel Aviv, Israeli medics have claimed.
Police suspect the fatal stabbings were a militant attack and that the killer fled the scene in a vehicle.
Road blocks have been set up in the town of Elad where the attack occurred and reporters on the ground said a helicopter could be seen hovering over the scene.
According to the Magen David Adom emergency service, three people have been killed and another four have been wounded, two of whom are said to be in a serious condition.
The attack has been met with praise from the Palestinian militant group Hamas, which it 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.”
Thursday’s attack arrived as Israel marked its Independence Day, a festive national holiday in which people typically hold barbecues and attend air shows.
A series of attacks in Israel, military operations in the occupied West Bank, and violence at the holy site in Jerusalem has seen simmering Israeli-Palestinian tensions reach boiling point in recent weeks.
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.
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.
With additional reporting from the Press Association