Israeli police detained Sheikh Najeh Bakirat, the Deputy Director of the Jerusalem Islamic Waqf, near the flashpoint Al-Aqsa Mosque compound, according to eyewitnesses, Anadolu News Agency reports.
No reason was given for Bakirat's arrest and Israeli police have yet to comment.
The Jordan-run Jerusalem Islamic Waqf is responsible for overseeing the holy sites in East Jerusalem.
Al-Aqsa Mosque is the world's third-holiest site for Muslims. Jews call the area the "Temple Mount", claiming it was the site of two Jewish temples in ancient times.
Israel occupied East Jerusalem, where Al-Aqsa is located, during the 1967 Arab-Israeli War. It annexed the entire city in 1980, a move never recognised by the international community.