Some 10,000 worshippers crammed into the Church of the Holy Sepulchre on Saturday night for the Holy Fire ceremony.
Another 30,000 remained outside under tight security by Israeli police. Scuffles have broken out in previous years amid disagreements between the different Orthodox denominations which share responsibility for the church.
Christians believe the church is built on the place where Jesus was crucified and buried.
According to the ancient ritual, the Greek Orthodox patriarch in the Holy Land, currently Theofilos III, lights an oil lamp in the darkened church. The light from the holy fire is then shared by candles to the crowd.
The patriarch carried an ornate staff and wore a golden crown as chanting pilgrims and clergymen with candles joined in worship, reports said.
The flame from Jerusalem is also passed to the Church of the Nativity in the West Bank town of Bethlehem, the traditional birthplace of Jesus Christ, and aboard special flights to Athens and other cities.
It was passed as far afield as Russia, where the Patriarch Kirill was the first to light his candle from it at the cathedral in Moscow.
The service was attended by Russian President Dmitry Medvedev and his wife Svetlana, Russian Prime Minister Vladimir Putin, and several other officials.
Georgian President Mikhail Saakashvili joined worshippers to celebrate Easter
In neighbouring Georgia, President Mikhail Saakashvili attended an Easter service in the Tbilisi Central Trinity cathedral with his wife and two sons.
Mr Saakashvili has been facing opposition calls for him to step down for the past week.
Russian leaders visited Moscow's Christ the Saviour Cathedral
Protesters have taken a short break for the Easter festivities, but opposition leaders have vowed to launch the "final stage of the battle" after the holidays.
"It is a great celebration for the entire Orthodox world," President Saakashvili said in the cathedral. "Georgia, as one of the most ancient Christian nations, is celebrating it and we are sharing it with all the Orthodox Christians worldwide."
In the Egyptian capital Cairo, Pope Shenouda III celebrated Mass for members of the Coptic Orthodox Church of Alexandria.
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