Israeli police said they killed three Palestinians involved in the attack.
IS issued a statement Saturday taking responsibility for the stabbing and shooting attacks Friday evening.
A statement by Fatah carried on the official Palestinian news agency Wafa condemned the "killing" of the three Palestinians, without mentioning the circumstances leading up to their deaths.
Nearly immediately, Hamas rejected the Islamic State claim and said one of the attackers belonged to Hamas, and two others to the Popular Front for the Liberation of Palestine, both domestic Palestinian groups.
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Hearing reports on a police radio of gunfire at an East Jerusalem holy site several blocks away from the Old City, a group of Israeli border police near the Old City's Damascus gate was preparing to respond when an assailant began stabbing Staff Sgt. Maj.
Earlier, at his weekly Cabinet meeting, Netanyahu lashed out at Palestinian leader Mahmoud Abbas for not condemning the attack.
"The commando operation in Jerusalem is renewed proof that the Palestinian people are continuing their revolution against the usurping occupation and that their intifada (uprising) is ongoing until they get full freedom", Qasem said.
The BBC apologized Sunday for a biased headline about Friday's terror attack in Yerushalayim, following a strong protest from the Israeli Foreign Ministry.
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The Pakistan openers capitalized on the lucky break by attacking Bumrah but Bhuvaneshwar Kumar held his own at the other end. The fourth, fifth and sixth overs were milked for 29 runs, after the first three had produced only eight.
On Tuesday, US Secretary of State Rex Tillerson said the Palestinian Authority had agreed to halt payments to the families of slain attackers, including suicide bombers.
"I call on the countries of the world to condemn both the murder and those who praise it, and demand the immediate cessation of Palestinian Authority payments to the families of terrorists, something that only encourages terror", Netanyahu also said Sunday. In that period, some 250 Palestinians were killed by Israeli fire. The attackers were identified by Israeli security services as residents of the West Bank, at least two of them teenagers from a village near the city of Ramallah.
An Israeli policewoman was critically injured in a stabbing attack in Jerusalem's Old City.
Israel captured the territory with its key holy sites from Jordan in the 1967 war. Two people were injured in the attack, according to The Times of Israel.
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