Led by hardline Jewish Rabbi Yehuda Glick, the settlers, backed by Israeli soldiers, toured several areas inside the compound, the Al-Aqsa Foundation for Endowment and Heritage said in a statement.
Eyewitnesses said the rabbi took a handful of dust from inside the compound for unknown reasons, according to the official Palestinian Wafa news agency.
In recent months, groups of extremist Jewish settlers, often accompanied by Israeli security forces, have stepped up their intrusions into the Al-Aqsa Mosque complex, the world's third holiest site for Muslims.
The frequent violations anger Palestinian Muslims and occasionally lead to violent confrontations.
Jews refer to the area as the "Temple Mount," claiming it was the site of two prominent Jewish temples in ancient times.
In September 2000, a visit to the site by controversial Israeli politician Ariel Sharon triggered what later became known as the "Second Intifada" – a popular uprising in which thousands of Palestinians were killed and injured.
Israel occupied Al-Quds during the 1967 Middle East War. It later annexed the holy city in 1980, claiming it as the capital of the self-proclaimed Jewish state.