Annan, who is due to attend the inauguration of Israel's new Holocaust museum Tuesday, was also scheduled to meet with Palestinian Premier Ahmed Qureia and Foreign Minister Nasser al-Qidweh.
Earlier, he visited the U.N. Relief and Works Agency in East Jerusalem where he bade farewell to Peter Hansen, UNRWA's outgoing commissioner-general.
Accompanied by his wife, he laid a wreath at the monument of two UNRWA staff members killed by Israeli soldiers' gunfire in the West Bank in 2002.
Annan praised the UNRWA staff for the "courage and devotion" they bring to their jobs in "very difficult and sometimes dangerous situations," a statement said.
Prior to talks with Israeli Prime Minister Ariel Sharon Sunday, Annan told reporters he was pleased with the progress made by Israel and the Palestinians last month at the Sharm al-Sheikh summit.