The Wadi al-Hilweh information center said that a special forces assaulted and detained three young men, and transferred them to al-Maskobiyeh detention center.
The group added that Israeli forces forced reporters out of the area.
Witnesses said that a special forces unit wearing tradition Palestinian scarfs infiltrated the neighborhood in a white van before confronting the young men.
Around a dozen suffered minor injuries, an AFP correspondent reported.
Police had deployed reinforcements in Jerusalem early in the day, fearing protests at the flash-point Al-Aqsa mosque compound in the heart of the Old City, a police spokesman said.
Access by Palestinian men to the compound had been limited to those over the age of 50 and with Israeli-issued Jerusalem residency cards. There were no restrictions on women.