The suspect was not immediately identified, but is believed to have been a Palestinian. Amateur footage showed a man in blue jeans and a black jacket lying still on the ground at the Lion's Gate, on the eastern side of the Old City, AP reported.
Israeli medics said that Israeli security forces, while firing on the suspect, had lightly wounded a 42-year-old woman in the leg.
Israeli police spokesman Micky Rosenfeld said the attacker was “armed with a knife” and approached an officer who responded to the attack.
The Old City is home to holy sites sacred to Muslims, Christians and Jews, including the flashpoint compound of the Al-Aqsa mosque.
Tensions there have been high in recent years, and clashes often erupt between Palestinian protesters and Israeli forces over the entrance to the site.
The Palestinians want East Jerusalem (al-Quds) to be the capital of their future state.