Thousands of Christian pilgrims and tourists from around the world have flocked to Bethlehem for Christmas.
About 120,000 visitors are in the Palestinian West Bank town - a third more than last year, the BBC reports.
Celebrations culminated in midnight mass at the 1700-year-old Church of the Nativity.
The church is built on the spot where it is believed Jesus was born.
On Christmas Eve, carol-singing crowds gathered around a 15-metre Christmas tree in Manger Square.
Restaurants and shops selling memorabilia such as olive wood-carved religious statues were doing a brisk trade.
The mayor of Bethlehem, Victor Batarseh, said he hoped the festivities would bring Palestinians closer to their dream of statehood.
Israel controls access to Bethlehem through checkpoints and a controversial security barrier.
