Muslims will return to Al-Aqsa Mosque to pray for the first time in nearly two weeks later Thursday, religious leaders announced.
Palestinian Muslims have been praying in the streets outside the mosque complex's ancient walls since 14 July in protest at Israeli security measures.
The decision to return to the mosque was announced after a meeting of the Waqf Council of Jerusalem's top Islamic figures.
It followed a night of street celebrations by thousands of Palestinians who claimed a victory against Israel's imposition of metal detectors and cameras at the entrances to the holy site after the deaths of two Israeli police officers and three Palestinians in a gun battle.
"We call the people of Jerusalem and inside Palestine and anyone who can reach Al-Aqsa Mosque to enter its courtyards," Sheikh Abdul Azeem Salhab, head of the Waqf Council, said.
As Israeli authorities removed the last remnants of security measures, following the removal of controversial metal detectors earlier this week, Palestinians poured into the streets to celebrate.
Sweets were thrown into the air, fireworks lit the sky and one man arrived with a car loaded with milkshakes to distribute among the revellers who poured in for the dawn prayers.
"This is the most beautiful feeling," Sheikh Raed Dana, an imam at the mosque, told Anadolu Agency.
"God willing, we will pray the afternoon prayer and we will celebrate the groups of murabiteen and the families of the martyrs." The murabiteen are volunteers who remain at the mosque night and day to protect the site.
Four Palestinians were killed in clashes with Israeli forces last Friday and Saturday as mass prayers and protests were held in the streets of East Jerusalem.
"It's a big achievement, Netanyahu retracted," Ahmad Tibi, an Arab lawmaker in the Israeli parliament, told reporters. "We called [on] him to retract. He is responsible for the bloodshed."
While Palestinians called the security measures a violation of the delicate balance of prayer and visiting rights, Israel said they were a response to the attack two weeks ago at the site.
Palestinians guard against any change to the arrangements around the site, which is the third holiest in Islam. It is also revered by Jews, who know it as the Temple Mount.