Israel's Magen David Adom emergency medical service said the three victims were taken to hospitals in Jerusalem in serious condition.
The incident occurred at the Old City's Jaffa Gate, a popular entrance for tourists at a time of increased visits to the Holy Land for the Christmas season.
A wave of violence since the start of October has claimed the lives of 124 on the Palestinian side, 17 Israelis, an American and an Eritrean.
Many of the Palestinians killed have been attackers, while others have been shot dead by Israeli security forces during clashes.
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