An estimated 90,000 faithful are expected to converge on the central West Bank town of Bethlehem to attend the midnight Christmas Mass.
The main rituals will take place at the Church of the Nativity, which is believed to be the birthplace of Jesus. Latin Patriarch Fuad Twal, who is the senior most Catholic bishop in the region, will be conducting the Mass.
A decorated 50-ft (15 metres) Christmas tree is installed at the Manger Square. Hotels and outlets selling memorabilia in the area are doing brisk business.
In addition to Catholics, Protestants, Greek Orthodox and Armenians also conduct separate services. While Catholics conduct their service at St. Catherine\'s Church, Protestants organise their Mass at the Shepherd\'s Field.
Traditionally, local schoolchildren march on the streets of Bethlehem on the Christmas eve.
This Palestinian city is now surrounded by barriers erected by Israeli authorities, apparently to prevent any disruptions from suspected militants. But local residents complain that the barriers are hampering their economy.
We present latest pictures from the Holy City: