The fire, believed to be accidental, damaged fabric wall hangings in the Grotto of the Nativity.
The church, whose construction was begun in 565 A.D. after the destruction of another church on the site, is regarded as standing above the birthplace of Jesus. The fire broke out in a grotto, or cave, under the basilica.
"An oil lamp fell over. The fire started on its own, then burned itself out," said Bethlehem governor Adbel-Fatah Hamayel.
Brightly-colored wall hangings were found damaged and blackened by soot, and two icons, depicting a baby Jesus held by his mother Mary, sustained smoke damage.
Bethlehem police said in a statement a wooden bowl caught fire at the entrance to the grotto,
causing "candles to fall down and set fire to curtains." They added wall tiles were also damaged by the heat.
Pope Francis visited the church Sunday.