Dozens of Palestinians and tourists flocked to Manger Square, near the Church of the Nativity, built over the spot where tradition says Mary gave birth to Jesus.
Some snapped selfies near the square's giant Christmas tree and watched the annual scouts parade in the city, located a short drive from Jerusalem in the Israeli-occupied West Bank.
The scouts marched waving flags and playing bagpipe music.
Christmas carols in Arabic rang out from speakers.
"It feels pretty awesome. This is my first Christmas away from home... But this is really amazing to be in Bethlehem," said Valeria, a 21-year-old from the US state of Wisconsin.
Ramzi Al Durzi, a Christian from Amman, came with his two children to visit relatives in Jifna, a Christian village near Ramallah, and decided to take in the parade.
"This is my first visit to Bethlehem and to Palestine and honestly the atmosphere is really great," he said.
Some 2,500 tickets are usually given out for the mass and those wishing to attend must register in advance. Attendees usually include Palestinian officials and foreign dignitaries.
Beyond that, tens of thousands of tourists are expected to visit sites including Bethlehem, Jerusalem and Nazareth over the holidays, tourism officials say.
Israel's tourism ministry said some 120,000 visitors were expected in December, half of them Christians. Palestinian officials said they were expecting more visitors than last year, with major hotels in Bethlehem booked.
The violence saw knife, gun and car-ramming attacks by Palestinians targeting Israelis. Many of the Palestinian assailants were killed by Israeli forces while others were shot dead during clashes and protests.
The violence has greatly subsided in recent months, though tourists will still have to cross Israel's West Bank separation barrier to reach Bethlehem.
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