Dignitaries also attended the popular event that took place in the biblical city of Bethlehem in the occupied West Bank.
Palestinian Prime Minister Rami Hamdallah and Fr Francesco Patton, a top official with the Catholic Church in the Holy Land, were present at Saturday's ceremony.
Mr Hamdallah took the opportunity to make a case for Palestine.
Palestinians light up Christmas tree outside the Church of the Nativity in occupied WB city of Bethlehem.
— AbdelKarim Alkahlout (@KareemN96) December 1, 2018
Beautiful tree lighting ceremony! #Christmas #Bethlehem #Palestine pic.twitter.com/wOrBVjxf1g
He said Palestinians were resisting Israeli plans "to uproot us and strip us from our civilisation and history".
Earlier on Saturday, Fr Patton greeted clergy and led a service at the Nativity Church.
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