With candles in hand, at least seven thousand pilgrims filled the Church of the Holy Sepulchre, according to police spokesman Micky Rosenfeld.
The church is built on the site where according to Christian tradition Jesus was crucified, buried and resurrected.
Thousands more stood in the square outside to receive the flame, representing the resurrection of Christ, which passed from candle to candle and will be taken back to Orthodox churches worldwide.
The ceremony is the holiest event for Orthodox Christianity. The Church of the Holy Sepulchre and the rest of the Old City that lie in east Jerusalem were occupied and later annexed by Israel following the Six Day War of 1967.
The Greek Orthodox, Armenian and Roman Catholic denominations share custody of the church.
Christians made up more than 18 percent of the population of the Holy Land when Israel was founded in 1948, but now form less than two percent, mostly Orthodox.
Israeli police, which secured the event, said it had taken place without any disturbances.