"They threw stones towards the Maghrebi Gate and police went onto the plaza," police spokeswoman Luba Samri told AFP, referring to the only entrance to the compound which can be used by non-Muslims.
Police said they used stun grenades against the demonstrators and that "dozens of people" had barricaded themselves inside the Al-Aqsa mosque.
Palestinian officials confirmed an unspecified number of people had barricaded themselves inside the Al-Aqsa mosque as well as the golden-topped Dome of the Rock, but the standoff ended peacefully after negotiations with the police.
"We are negotiating with the Israelis not to storm into the mosque or the Dome of the Rock and to let people out," Sheikh Azzam al-Khatib, head of the Jerusalem Waqf, told AFP.
Shortly afterwards, those inside the mosques left and the plaza was largely cleared, police and Waqf officials said.
Police said four people had been arrested and 11 of their officers were "lightly injured from stones."
Palestinian medics treated five protesters, some of whom were suffering from tear gas inhalation, and others who had been "beaten by the police," while doctors at Maqassed hospital said they had seen four people, including one who was hit by a tear gas grenade.