Dozens of Palestinians and tourists flocked to Bethlehem's Manger Square near the Church of the Nativity, where celebrations will culminate with a midnight mass at the site where Christians believe Jesus was born.
Some snapped selfies near the square's giant Christmas tree and watched the annual Scouts parade in the city, a short drive from Jerusalem in the Israeli-occupied West Bank.
"This is Christ's land, the land of peace," said Ramzi Abu Khalil, who was wearing a red Santa hat.
Violence put a damper on celebrations in Bethlehem last year, as a wave of knife, gun and car-ramming attacks by Palestinians targeted Israelis and reduced sharply the number of Christmas visitors.
Also Read
The unrest has subsided in recent months and, with major Bethlehem hotels booked up, many in the city were optimistic this year's holiday season would bring more visitors.
In Europe, many preparing to celebrate were still reeling from this week's truck attack on the Berlin Christmas market.
Amri, 24, is believed to have hijacked a truck and used it to mow down holiday revellers at the market on Monday, killing 12 people in an attack claimed by the Islamic State (IS) group.
Tunisia said today it had arrested three men suspected of links with Amri, including his nephew.
Locals and tourists in Berlin visited the Christmas market targeted in the attack, and many took a moment to quietly light a candle or lay flowers for the victims.
"So even though you are really sad about what happened you can still keep Christmas. It's not like this crazy guy ruined it for everybody."
Security was tight elsewhere in Europe for the holidays, including at Milan's cathedral, where police were out in force and concrete barricades had been erected around the Piazza del Duomo, where a Christmas market is held.
In France, 91,000 police, gendarmes and soldiers had been deployed to guard public spaces including churches and markets.
In the northern city of Lille, concrete blocks had been laid in areas around the city to prevent vehicle attacks, prompting 62-year-old Michelle to ask: "How far are we going to go?"
Disclaimer: No Business Standard Journalist was involved in creation of this content