"The terrorist was quickly neutralized by one of our officers at the scene and prevented him from carrying out an even worse attack," police spokesperson Eli Levi said on Israel’s Channel 12.
A police statement said police were present in force at the scene and were "conducting extensive searches with a helicopter and additional resources".
The Islamist group Hamas, which is at war with Israel in Gaza, said in a statement that the stabbing attack was a "natural response" to Israeli attacks on Palestinians and to the assassination of the group’s leader, Ismail Haniyeh, last week in Tehran.
However, it stopped short of claiming responsibility for Sunday’s attack.