Police fired tear gas and stun grenades while young protesters who had pledged a day earlier to "defend" Al-Aqsa threw stones before barricading themselves inside the mosque itself, an AFP journalist said.
According to police, the young protesters had slept overnight at the mosque and also threw petrol bombs at security forces during the clashes which caused a small fire at the entrance to the building.
Sources with the Jordanian-run organisation that administers the site, the Waqf, told AFP that police stun grenades provoked four fires inside the building that were brought under control.
Muslim worshippers who were at the compound after morning prayers as the raid began were forced to leave by police and all gates used by Muslims to enter the site were closed. Some remained near the gates and chanted in protest.
Regular visits by non-Muslims permitted between 7:30 am and 11:00 am were then allowed to go ahead, according to police.
The compound has been the scene of repeated clashes in recent weeks, provoking international calls for calm. The highly sensitive site is the third holiest in Islam but is also known to Jews as the Temple Mount, the most sacred in Judaism.
Recent weeks have seen a series of Jewish holidays which have led to an increase in visits by Jews that have sparked clashes. The same situation is feared over Sukkot, an eight-day religious feast that began on Sunday night.
Jews are allowed to visit the site, but cannot pray there to avoid provoking tensions. Muslims fear Israel will seek to change rules governing the compound, which is located in Israeli-annexed East Jerusalem.
Israeli Prime Minister Benjamin Netanyahu has said repeatedly he is committed to maintaining the status quo at the site despite the views of some hardliners within his governing coalition.
Efforts by a hard-line Jewish minority to build a new temple there have further stoked suspicions.
Brief clashes had also broken out on Sunday, and afterwards young Palestinian protesters were seen preparing to "defend" the mosque during Sukkot, stocking stones inside the shrine, barricading doors and planning to sleep there.
Visits by Jews were stopped and age restrictions on Muslim men entering the compound lifted during the Muslim holiday of Eidul Azha, which was celebrated from Thursday to Sunday.
However, a ban on Muslims under 50 was re-imposed as Sukkot started.
Jews celebrate Sukkot, or the Fest of Tabernacles, to commemorate their journey through the Sinai wilderness to the Holy Land after their Exodus from Egyptian slavery.
The radical northern branch of the Islamic Movement in Israel and the Higher Arab Monitoring Committee, which represents Arab communities in Israel, had urged Muslims to go to the compound to defend it on Sunday.
"Al-Aqsa is a holy place, but it is also a national symbol for Palestinians and all Arabs," Sheikh Kamal Khabit, deputy head of the Islamic Movement, said.
"Jewish extremists want to destroy Al-Aqsa to build a third temple."
According to Biblical tradition, the first and second Jewish temples were located at the site of the Al-Aqsa compound and destroyed by the Babylonians and the Romans.
In past raids, Israeli police have briefly entered the mosque to close the door on stone-throwing rioters inside and restore calm to the compound.
This month over the Jewish New Year holiday, or Rosh Hashanah, police raided the compound to stop what they said were plans by Palestinian youths to disrupt visits to the site.
Clashes occurred over three consecutive days between rioters and police, provoking international calls for calm at the highly sensitive site.
Israel seized east Jerusalem, where Al-Aqsa is located, in the Six-Day War of 1967 and later annexed it in a move never recognised by the international community.
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