Video showed what looked like an extensive blaze at the site in the northern city of Nablus known as Joseph's Tomb, and the Israeli army called the attack "a despicable act" of desecration.
Palestinians have called for a "Friday of revolution" against Israel and Jerusalem police barred men under 40 years of age from attending the main weekly prayers at the flashpoint Al-Aqsa mosque, seeking to keep young protesters away.
Israeli security forces have deployed massively in Jerusalem after two weeks of Palestinian attacks in the city and across Israel.
"Police and border police forces will act with determination and without compromise against any attempt to disturb order or public safety," a police statement said late yesterday.
The United Nations Security Council will hold an emergency meeting at Jordan's request today to discuss the upsurge of violence.
Israeli Prime Minister Benjamin Netanyahu today reiterated his willingness to meet Palestinian leader Mahmud Abbas, while accusing him of inciting and encouraging violence.
"It's time that president Abbas stops not only justifying it, but also calling for it," Netanyahu told reporters.
US Secretary of State John Kerry also warned the Palestinian leader not to incite violence.
"President Abbas has been committed to non-violence. He needs to be condemning this, loudly and clearly," said Kerry, who plans to travel to the region "in the coming days" to try to calm tempers.
Abbas has called for peaceful protest, but frustrated Palestinian youths have defied attempts to restore calm.
Israel is to deploy some 300 soldiers from Sunday to reinforce police stretched thin by the unrest.
The last time soldiers deployed in such large numbers was in 2002, during the second intifada, according to a security source.
Joseph's Tomb, inside a compound in the Palestinian refugee camp of Balata in Nablus, has been the scene of recurring violence between Israelis and Palestinians.
Many Jews believe it to be the final resting place of the biblical Joseph, while Muslims believe that an Islamic cleric, Sheikh Yussef (Joseph) Dawiqat was buried there two centuries ago.
The shrine is under Palestinian control and off-limits to Israelis except on escorted trips organised by the army.
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