The annual parade, known as the "Flag March," was held under heavy police security a day before the US was expected to move its embassy to Jerusalem, reports Xinhua.
The marchers, mainly ultranationalist religious Jewish youths, waved Israeli flags and blew horns as they passed through the Old City's Muslim Quarter en-route to the Western Wall.
The parade is the main event of the "Jerusalem Day," an annual commemoration of the "reunification" of Jerusalem.
It later annexed East Jerusalem and declared it as part of its "eternal and indivisible capital," in a move that has never been recognised by the international community.
Palestinians, who make up more than one third of the city's overall population, consider East Jerusalem as the capital of their future state.
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