Palestinian President Mahmoud Abbas and European Union foreign policy chief Catherine Ashton, and Jordanian Foreign Minister Nasser Judah were among the dozens of dignitaries at the Midnight Mass at the Church of the Nativity, Israel Radio and the Ma'an news agency reported.
Choirs from all over the world gathered in Manger Square Tuesday night and sung Christmas carols, the Palestinian news agency Wafa said.
Hotels in the city boasted full occupancy, Israel Radio reported.
An estimated 30,000 Palestinian Christians live in Bethlehem and the surrounding vicinity, the radio said.
During the holiday season that started on Dec.19 and will end on Jan.20, the Israeli army said it would allow an unlimited number of Christian Palestinians from the West Bank to enter Israel and celebrate with their relatives and families. In addition, Israel issued 200 entry permits to Palestinians living abroad that will enable them to celebrate with their families during the holiday season. In addition 500 Palestinian Christians from the Gaza Strip under the age of 16 and over the age of 35, were allowed to enter Israel and the West Bank to participate in the festivities, the army said.
The BBC said the number of visitors to Bethlehem has steadily increased in recent years.