Israeli authorities said at least five people were injured in the incident, including a 70-year-old man.
A Palestinian man drove his car into crowds in Jerusalem, wounding five people before being shot and killed by a passerby, Israeli police said.
Earlier Monday, Israeli forces killed a Palestinian in a raid in the occupied West Bank, the latest in a series of incidents during an escalation in violence over the past year.
The Israeli ambulance service said it had treated five people who had been hit by the car before transferring them to hospital, including a 70-year-old man who was in serious but stable condition.
Video obtained by Reuters showed a man lying on the hood of a car parked in the middle of the road when shots rang out.
The driver of the car, a 30-year-old man from East Jerusalem, had tried to deliberately injure civilians, Israeli Prime Minister Benjamin Netanyahu said at the start of a ceremony commemorating the Israeli military dead.
“This terrorist attack in this place reminds us that the land of Israel and the state of Israel were earned through many trials and tribulations,” he said.
Since the beginning of this year, Israeli-Palestinian violence has surged. In a series of Palestinian attacks, Israeli settlers frequently launched military attacks and violence. Since January, more than 90 Palestinians and at least 19 Israelis and foreigners have been killed.
Earlier on Monday, Israeli forces killed a Palestinian man during a raid on the Aqabat Jabr refugee camp near the West Bank city of Jericho.
“During the event, two suspects were found fleeing the scene. Soldiers returned fire with live ammunition. The hit rate was determined,” the military said. It did not elaborate on why the two Palestinians were targeted.
Jericho governor was quoted by the official Palestinian news agency WAFA as saying that one man was shot dead by the army and three others were wounded.
The governor’s statement said the military did not release the man’s body to his family.
Separately, the Palestinian Prisoners Association advocacy group said Israeli security forces arrested 30 people in the West Bank overnight and early Monday.
During the 1967 Middle East war, Israel captured the West Bank and East Jerusalem, which the Palestinians hope will be the centerpiece of a future independent state. It has since annexed East Jerusalem in a move that has not received international recognition.