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Christians came together at the Church of the Holy Nativity traditionally seen as Jesus’ birthplace.
It is always crowded on Christmas Eve, and there was no room at the inn this year, either.
Among the politicians present were the Palestinian President Mahmoud Abbas and the EU’s Foreign Policy Chief Catherine Ashton.
Her office stressed it was a private visit.
The Latin Patriarch of Jerusalem Fouad Twal called for a solution to the problems in the region..
“We are living in a very difficult situation in the Holy Land. A situation for which we do not have an immediate solution. A difficult situation which affects all the inhabitants of the Holy Land,” he said.
Outside the church in Manger Square, it was a festive atmosphere.
Visitor numbers are expected to be up 14 per cent this year, due in part to the recent relative calm in the region.