It brings to eight the number of Israelis killed in the past fortnight of unrest along with 41 Palestinians.
The wailing of an ambulance marks another street attack in Israel.
Officials say a gunman opened fire on bus passengers in the southern city of Beersheba, killing one and wounding several others.
Rescue services commander Itzik Elfassi describes the scene.
"There was a shooting attack at the central bus station, a number of ambulances arrived at the scene immediately. We treated seven people overall, besides the two terrorists that were neutralised."
The gunman was shot and killed and an African bystander was shot by security forces who mistook him for a second gunman.
The latest attack comes as Prime Minister Binyamin Netanyahu dismisses proposals made to the United Nations Security Council by France.
It suggested international observers could be deployed at the Al Aqsa Mosque compound, known to Jews as Temple Mount.
It's one of the most important religious sites in the old city of Jerusalem, revered by Jews, Muslims and Christians.
But Mr Netanyahu says Israel hasn't changed anything about the compound or access to it.
"We didn't change anything. The orders of prayer, the visiting rights have not changed for the last fifteen years. The only thing that changed are Islamist hoodlums paid by the Islamist movement in Israel and by Hamas who are entering the mosque and trying to put explosives there and from there emerge and attack Jewish visitors to the Temple Mount and Christian visitors."
Amid the wave of street attacks, Israeli authorities have erected a concrete wall along a stetch of street in Jerusalem that's been a flashpoint for the violence.
On one side is a Jewish neighbourhood.
The other side is Palestianian.
This East Jerusalem resident describes it as apartheid.
"They want to separate between the residents of Jerusalem. They separated us as Palestinians in the West Bank and Jerusalem; today they are trying to separate between the residents of Jerusalem and between the neighborhoods of Jerusalem and the Holy City and Al-Aqsa mosque."
After days of violence in Israeli and Palestinian territories, United States Secretary of State John Kerry says he will meet leaders from both sides on separate trips to Germany and the Middle East.
More than two weeks of unrest has left 41 Palestinians and seven Israelis dead and is raising fears of a full-scale Palestinian uprising.
Those fears have prompted thousands of Israeli Jews and Arabs to demonstrate together in Jerusalem, calling for an end to the violence and a resumption of peace negotiations.
Teacher Uri Weltmann was one of those attending the march.
"We came here to show that Jews and Arabs, Israelis and Palestinians can stand together and move towards a different policy, a policy of a just peace, of independence for both of our peoples. We say we need to go exactly to the other way, peace rather than occupation, equality rather than racism."
