Tensions simmer in the flashpoint area over Israeli plans to forcibly evict Palestinian families from their homes and frequent desecration of the al-Aqsa Mosque compound.
In a statement, Israeli authorities said a 35-year-old man was stabbed and lightly wounded near the First Station on Saturday morning.
The unnamed Palestinian man, 20, was shot by Israeli police officers at the scene. He was in serious condition.
The stabbing follows several similar incidents in the Old City of al-Quds over the past few weeks.
Dozens of Palestinians have been killed by Israeli forces in recent months for allegedly attempting to carry out stabbing or car-ramming attacks.
On March 7, Israeli forces shot dead a young Palestinian man after he allegedly stabbed two officers.
ZZ/