Despite the odd air raid siren and angry demonstrations every night, Jerusalem had been relatively calm until Monday, when tensions over Gaza exploded into violence.
Since June violence has rocked the occupied Palestinian territories, including east Jerusalem which Israel annexed during the 1967 Six Day War.
On Monday the tensions exploded in Jerusalem which saw its first deadly attack in more than three years.
A Palestinian rammed an earthmover into the side of a bus, knocking it over and killing one Israeli and wounding another five, police said.
The driver was quickly shot dead by two policemen who happened to be at the scene, foiling what police described as a "terrorist attack."
Shortly afterwards, as his body lay in the street where the incident happened - which is on the seamline between east and west Jerusalem - scores of curious onlookers rushed to the scene, both Israeli and Palestinian.
As the police went to remove the body, some Israelis in the crowd began whistling and chanted "Death to Arabs."
In the same area, dozens of Israelis could be seen trying to attack Arab cars, as well as a public bus with an Arab driver, although they were stopped by police, the correspondent said, creating a highly volatile situation.
They also attacked a bus carrying Arab workers whom the police had been trying to evacuate from the area.
Shortly afterwards, a gunman on a motorbike opened fire at an Israeli soldier who was standing by the roadside in the nearby area of Mount Scopus, seriously wounding him, police said.
The shooter fled and police with dogs were conducting intensive searches to find him as police helicopters flew overhead, the correspondent said.
Asked if there was any link between the earthmover attack and the offensive in Gaza, police spokeswoman Luba Samri said they were "examining all options."
She identified the driver as a young Palestinian from the east Jerusalem neighbourhood of Jabal Mukaber who had no criminal record.
"That is why the police thought he may have acted for nationalist reasons," she explained.
Jerusalem Mayor Nir Barkat called for calm but said such attacks "would not go unpunished."
In Gaza, Hamas spokesman Fawzi Barhum hailed the attack as "a courageous act of resistance" and a "natural response to the occupier's massacres of our people in Gaza."
He called for an "escalation of resistance across Palestine."
Since the start of the Israeli operation on July 8, demonstrations of solidarity with Gaza have been taking place almost nightly in different neighbourhoods of east Jerusalem as well as across the West Bank.
Following the bloodshed in Jerusalem, police raised the level of alert in the city as well as in Tel Aviv, a spokesman said.