Clergymen from different Christian denominations held services at the ancient Church of the Holy Sepulcher, revered as the site of Jesus' crucifixion, burial and resurrection.
According to the New Testament, Palm Sunday marks the day Jesus rode into Jerusalem, greeted by cheering crowds bearing palm fronds. It also marks the beginning of Holy Week, which continues with commemorations of Jesus' crucifixion on Good Friday before celebrating his resurrection on Easter the following Sunday.
This year, the calendar of Orthodox Christians coincides with that of Protestants and Roman Catholics, meaning that the sects are marking Holy Week together.
Christian pilgrims joined local Palestinian Christians in the traditional march from the Mount of Olives to the Old City of Jerusalem on Sunday. Many carried palm leaves in commemoration of the original event 20 centuries ago.
The Christian population in the West Bank and Gaza has been on the decline in recent years. Many have left for economic reasons and Muslim pressure.
About 50,000 Christians live in the Palestinian areas, a tiny minority among about 4 million Muslims. About 123,000 Christian Arabs live in Israel, among about 1.5 million Arabs with Israeli citizenship.
Father Jose Cabrera from Peru was one of the pilgrims marching in Sunday's procession. "This is a wonderful experience because we are living once again the same experience that Jesus had when he came down the mount of olives and entering the great city of Jerusalem," Cabrera said. "I am just grateful to God to be here with my friends visiting this wonderful place."
Christians also celebrated at the Church of the Nativity in the West Bank town of Bethlehem, the traditional birthplace of Jesus, and in the Gaza Strip, home to a small Christian population of about 2,000.