The bomb exploded aboard a bus in a relatively isolated area of southern Jerusalem on Monday, with the Hamas- affiliated bomber later dying.
Israeli authorities called it a suicide bombing, the first since a wave of violence began last October.
Violence since then has killed 28 Israelis and 201 Palestinians. The majority of the Palestinians killed were carrying out knife, gun or car-ramming attacks, according to Israeli authorities.
However the violence had appeared to subside in the weeks before Monday's bus blast.
Authorities yesterday increased security in Jerusalem for the eight-day Passover festival, during which thousands of Jews come to the city to celebrate.
Israeli lawmakers and ministers have been temporarily banned from the highly sensitive Al-Aqsa mosque compound, known to Jews as the Temple Mount, to avoid provoking tensions.
Israel has also closed off all crossing points between the occupied West Bank and the Gaza Strip to Israeli territory for yesterday and today.
Israelis and Palestinians have questioned whether the bus attack will reignite the violence or prove to be an aberration.
An Israeli military official said the violence had at one point evolved from mostly lone wolf operations into what seemed to be "revenge" attacks, with small cells that sometimes used improvised guns, before the recent decline.
Many of the attackers have been young people, including teenagers.
Intelligence has focused on trying to find potential attackers beforehand, including monitoring social media and speaking to parents when there is reason to think someone could turn violent, the official said.
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