"A group of Jewish worshippers were attacked as they walked...To Beit Horot," a police statement said, referring to a Jewish seminary set up on the Mount of Olives by ultranationalist rabbi Benny Elon in 1999.
One man was stabbed in the back and the second hit with a blunt instrument, apparently an iron bar.
On Tuesday, two Palestinians attacked a synagogue in west Jerusalem, killing four worshippers and fatally wounding a policeman who arrived at the scene.
The killings hiked tensions in Jerusalem, already the site of months of unrest.
Tensions have been rising in Jerusalem since the bodies of three kidnapped young Israelis were discovered in late June, leading to a revenge attack in which a Palestinian teenager was abducted and burned alive.
A spate of "lone wolf" attacks by Palestinians, reprisals by hardline Jews and a growing focus on religious confrontation have left both sides living in dread of what will come next.
Palestinians have been angered by the efforts of hardline Jewish activists to overturn a long-standing ban on Jews praying at the Al-Aqsa mosque compound, with unrest further fuelled by a slew of new Israeli settlement projects in east Jerusalem.
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