"May we work together for justice and peace," he said at the sprawling plaza, which is also considered sacred by Jews because it was the site where their two Jewish Temples once stood.
As he toured the compound accompanied by the Grand Mufti of Jerusalem, Mohammed Hussein, he was surrounded by a large crowd of Catholic and Muslim officials, as Vatican security guards and Israeli police looked on.
Entering the exquisite blue-tiled Dome of the Rock with its landmark golden cupola, which is used as a place of worship for women only, the pope first removed his shoes.
Located at the southeastern edge of the Old City, the compound is known to Muslims as Haram al-Sharif or the Noble Sanctuary, and to Jews as the Temple Mount.
For Jews, it is the holiest site in Judaism but they are forbidden by law to pray there, praying instead at the adjacent Western Wall, the last remnant of the retaining wall that supported the second Temple complex.
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