Fifteen soldiers and four civilians were wounded after a Palestinian man rammed his car into a crowd here Monday night.
Wails of police sirens were heard across downtown Jerusalem when the incident took place. Xinhua correspondents rushed to the scene and saw the vehicle, a black BMW, lying on the pedestrian lane, with its front bumper and hood contorted and its front and rear window glass smashed.
Describing it a terrorist attack, which happened around 11 p.m. (2000 GMT) at a busy intersection just outside the Old City, Police Spokesman Micky Rosenfeld told Xinhua that the driver was shot dead on the scene by a military officer.
The vehicle number, Rosenfeld said, shows the car is from an Arab village in east Jerusalem. Jerusalem Police Commander Ilan Franco later confirmed that the driver was a Palestinian from east Jerusalem, but he gave no more details.
"I saw the car coming quickly and hit a group of soldiers and students standing there. It happened very fast. It was impossible to know beforehand that this is what he intended to do," local daily Ha'aretz quoted an eyewitness as saying.
The Magen David Adom rescue service reported that two of the wounded were in serious conditions. Local TV network Channel 2 reported that a previously unknown group has claimed responsibility for the attack.
The police had launched an investigation into the incident, on which they did not received any prior intelligence. Franco said that the driver was apparently acting alone.
A resident living nearby, who gave her name as Esther, told Xinhua that she noticed the car, with three people in it, roving around the spot for at least half an hour, but only the driver was in the car when the attack happened.
Meanwhile, Israel Radio reported that a large group of mostly ultra-Orthodox Jews chased an Arab into the Old City following the attack.
The police is expected to further beef up the security measures in and around Jerusalem as the level of alert have already been kept high in the holy city recently due to the Islamic holy month of Ramadan and the upcoming Jewish New Year's Day and other holidays.
In the wake of the incident, Israeli Defence Minister Ehud Barak released a statement demanding a green light to demolish homes of those whom he called Palestinian terrorists.
Exactly two months ago, a Palestinian from east Jerusalem rammed a bulldozer into pedestrians and cars in downtown Jerusalem, injuring 16 people before he was shot dead.
In early July, a similar attack shocked the holy city, during which another Palestinian went on a bulldozer rampage in the downtown area of the holy city, killing three Israelis and injuring over 40 before he was killed.
The two bulldozer incidents followed a shooting spree at a religious school in Jerusalem on March 6, in which eight Israeli students were killed by a Palestinian before he was shot dead.
Due to the three attacks, Israel's public appeal to destroy the attackers' homes, which the Israeli Supreme Court ruled against several years ago, has been running high.