At least four Israelis have been killed and eight injured as two men armed with a pistol, knives and axes attacked a West Jerusalem synagogue, police say.
The attackers - Palestinians from East Jerusalem - were shot dead.
There have been several deadly attacks and clashes in Jerusalem recently amid tension over a disputed holy site.
Israeli Prime Minister Benjamin Netanyahu has vowed to respond "with a heavy hand" to the attack - the deadliest in Jerusalem in six years.
This man was praying at the synagogue when he heard a "flurry of shots"
He blamed "incitement" by Hamas and Palestinian President Mahmoud Abbas, and said the international community had ignored their actions.
Hamas and Mr Abbas's Fatah party - rival Palestinian factions - agreed to form a unity government earlier this year, a move denounced at the time by Israel.
Mr Abbas's office issued a statement saying: "The presidency condemns the attack on Jewish worshippers in their place of prayer and condemns the killing of civilians no matter who is doing it."
The Abu Ali Mustafa Brigades, the military wing of the Popular Front for the Liberation of Palestine, says it carried out the synagogue attack.
Militants from the far-left-wing Palestinian nationalist group have been behind many previous attacks on Israelis.
Israeli police spokesman Micky Rosenfeld: "There was a gun battle... both the terrorists were shot and confirmed dead at the scene"
Hamas and another militant group, Islamic Jihad, praised the attack. Israel has designated both groups as terrorist organisations.
Visiting London, US Secretary of State John Kerry said the act of "pure terror... simply has no place in human behaviour". His UK host Philip Hammond condemned "the appalling attack".
Tensions have been rising in Jerusalem recently
Analysis by Kevin Connolly, BBC News, Jerusalem
Jerusalem has been a place of division fiercely contested by rival religious traditions for many hundreds of years.
In the last few weeks tensions have risen sharply - largely as the result of the revival of an ancient dispute over rights of worship at a site within the walls of the Old City.
Muslims call the site al-Haram al-Sharif and believe it is the place where the Prophet Muhammad ascended into heaven - to Jews it is Temple Mount and marks the place where the sacred temples of their faith stood in ancient times.
By a long-standing tradition, Muslims alone have the right to pray at the site although people of other faiths may visit.
The issue is of such sensitivity that even when Israel captured the Old City of Jerusalem during the war of 1967 it handed control of the compound back to an Islamic religious authority which continues to administer it to this day.
In recent times some religious Jews have begun to argue for a change in the status quo which would also allow them to pray there - any hint of such change is viewed with deep anger in the Islamic world.
The attackers - Palestinians from East Jerusalem - were shot dead.
There have been several deadly attacks and clashes in Jerusalem recently amid tension over a disputed holy site.
Israeli Prime Minister Benjamin Netanyahu has vowed to respond "with a heavy hand" to the attack - the deadliest in Jerusalem in six years.
This man was praying at the synagogue when he heard a "flurry of shots"
He blamed "incitement" by Hamas and Palestinian President Mahmoud Abbas, and said the international community had ignored their actions.
Hamas and Mr Abbas's Fatah party - rival Palestinian factions - agreed to form a unity government earlier this year, a move denounced at the time by Israel.
Mr Abbas's office issued a statement saying: "The presidency condemns the attack on Jewish worshippers in their place of prayer and condemns the killing of civilians no matter who is doing it."
The Abu Ali Mustafa Brigades, the military wing of the Popular Front for the Liberation of Palestine, says it carried out the synagogue attack.
Militants from the far-left-wing Palestinian nationalist group have been behind many previous attacks on Israelis.
Israeli police spokesman Micky Rosenfeld: "There was a gun battle... both the terrorists were shot and confirmed dead at the scene"
Hamas and another militant group, Islamic Jihad, praised the attack. Israel has designated both groups as terrorist organisations.
Visiting London, US Secretary of State John Kerry said the act of "pure terror... simply has no place in human behaviour". His UK host Philip Hammond condemned "the appalling attack".
Tensions have been rising in Jerusalem recently
Analysis by Kevin Connolly, BBC News, Jerusalem
Jerusalem has been a place of division fiercely contested by rival religious traditions for many hundreds of years.
In the last few weeks tensions have risen sharply - largely as the result of the revival of an ancient dispute over rights of worship at a site within the walls of the Old City.
Muslims call the site al-Haram al-Sharif and believe it is the place where the Prophet Muhammad ascended into heaven - to Jews it is Temple Mount and marks the place where the sacred temples of their faith stood in ancient times.
By a long-standing tradition, Muslims alone have the right to pray at the site although people of other faiths may visit.
The issue is of such sensitivity that even when Israel captured the Old City of Jerusalem during the war of 1967 it handed control of the compound back to an Islamic religious authority which continues to administer it to this day.
In recent times some religious Jews have begun to argue for a change in the status quo which would also allow them to pray there - any hint of such change is viewed with deep anger in the Islamic world.
The attack happened at a religious seminary site on Harav Shimon Agassi Street - home to a largely Orthodox Jewish community in the Har Nof neighbourhood. Among those killed was Rabbi Moshe Twersky, 60, head of the seminary.
Police say there was a shoot-out with the attackers, said to be cousins, when officers reached the scene.
Pictures posted online by an Israeli military spokesman show a bloodied meat cleaver, bodies lying between desks and chairs on a blood-stained floor, their faces covered with their prayer shawls.
"I tried to escape. The man with the knife approached me. There was a chair and table between us... my prayer shawl got caught. I left it there and escaped," one of the Israelis told Channel 2 television.
In the Gaza Strip, Palestinians distributed sweets in celebrations, some holding aloft an image of the attackers
Praising the attack, Hamas said it was in revenge for the death of a Palestinian bus driver found hanged inside a vehicle in Jerusalem on Monday.
Israeli police said it was a case of suicide, but his family did not accept the post-mortem findings.
Ghazi Hamad, Hamas: "Every day there is a crime against a Palestinian citizen"
US Secretary of State John Kerry describes the attack as "an act of pure terror"
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Jerusalem on edge
Tensions in the city have risen in recent weeks, with two deadly attacks by Palestinian militants on pedestrians in the city and announcements by Israel of plans to build more settler homes in East Jerusalem.
Emergency services clean the site outside the Jerusalem synagogue
Security forces engaged in a fire fight with the attackers
The compound - known to Jews as the Temple Mount and to Muslims as al-Haram al-Sharif - is the holiest site in Judaism, while the al-Aqsa Mosque is the third holiest site in Islam.
Orthodox Jewish campaigners in Israel are challenging the long-standing ban on Jews praying at the compound.
Palestinians want East Jerusalem, occupied by Israel since 1967, as the capital of a future state.
