"The critically injured gunshot victim has died of his injury," Shaarei Tzedek hospital said in a statement.
In the attack, near the main tourist entrance to Jerusalem's Old City, two Israelis suffered serious knife wounds and police said officers shot dead the Palestinian assailants as they stabbed a victim.
A third Israeli was shot in the melee, "apparently from the police fire to neutralise the terrorists," a police statement said.
Many of the Palestinians killed have been attackers, while others have been shot dead by Israeli security forces during clashes.
The stabbers have often been young Palestinians, including teenagers, who appear to be acting on their own.
A number of them have attempted attacks with kitchen knives in what some analysts have described as de facto suicide missions.
Palestinians have grown frustrated with Israel's occupation, the complete lack of progress in peace efforts and their own fractured leadership, while international efforts to end the violence have so far failed.
