Yacoub Shaheen, 22, beat finalists Ameer Dandan from an Arab town in northern Israel and Ammar Mohammed from Yemen.
Shaheen is the second Palestinian to win the Arab world's version of American Idol. In 2013, Palestinian singer Mohammed Assaf from Gaza won the television talent contest.
Shaheen's parents joined hundreds of Palestinians who gathered to watch the results on a large screen in front of the Church of the Nativity, which tradition says marks the spot where Jesus was born.
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