An AFP correspondent witnessed the clashes erupt shortly after the worshippers entered.
The Palestinian Red Crescent reported 46 people wounded both inside the Haram al-Sharif compound, known to Jews as the Temple Mount, and in the immediate area.
The reasons for the clashes inside the compound were not immediately clear.
Outside, clashes broke out when a group of policemen walked in the middle of a crowd. Palestinians threw plastic bottles and Israeli forces fired stun grenades.
Thousands of worshippers had earlier streamed into the compound for afternoon prayers, ending a boycott after Israel removed controversial new security measures, installed after a July 14 attack killed two policemen.
The site includes the Al-Aqsa mosque and the Dome of the Rock.
Some cried as they entered while others shouted “Allahu Akbar” (God is Greatest).
Muslims had refused to enter the compound and prayed in the streets outside after Israel installed the new security measures.
Palestinians viewed the move as Israel asserting further control over the site.
Israeli authorities said the measures, including metal detectors, were needed because the July 14 attackers smuggled guns into the compound and emerged from it to attack the officers.
Deadly unrest erupted in the days after the new measures were introduced, with clashes breaking out around the compound and in the occupied West Bank, leaving five Palestinians dead.
A Palestinian also broke into a home in a Jewish settlement in the West Bank last week and stabbed four Israelis, killing three of them.
