Israeli police and troops struggled to bring the brawl under control as clergy members clashed at the Church of the Holy Sepulchre in the walled city.
The faithful kicked, punched and lashed out at each other with candles at the revered spot where Christians believe Jesus was buried and resurrected.
Several followers were left with black eyes, bruises and cuts as priests tried to tear their rivals' robes off in the brawl.
The famous pilgrimage site is used by several religious denominations.
But such are the rivalries that the church keys have been entrusted for centuries to two Muslim families.
Police spokesman Micky Rosenfeld said two monks were arrested - one from each side.
He said the incident flared over preparations for the annual ceremony held by the Armenians to commemorate the discovery of the cross believed to have been used to crucify Jesus.
Six Christian groups control the ancient church, which serves as the headquarters of the Greek Orthodox Patriarch of Jerusalem.
They regularly fight over turf and influence, and police are occasionally forced to intervene.
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(Source: SKYN)