The two injured persons, ultra-orthodox men who were on their way back from morning prayers, have been sent to medical centers, Israeli newspaper reported, citing a police spokesperson.
The Israel police said a helicopter was engaged in searching the shooter, and the weapon used has already been found.
"Large police forces and border police are operating in the area at this time and are conducting extensive searches for the suspect believed to be involved in the morning shooting near the Shimon Hatzadik junction. Officers are searching from the ground and from the air with the assistance of a police helicopter... A short time ago, a police force located a Carlo-type weapon near the scene of attack," the police said on social media.
On Thursday, the Israeli police stated that they had thwarted a stabbing attack planned to take place in Jerusalem during the Jewish Passover celebration.
Over the past few days Israeli police have reinforced security measures in Jerusalem's Old Town, where thousands of Christian, Jewish and Muslim pilgrims have gathered to celebrate key holidays of their religions. This year's celebrations are taking place amid growing tension between Israelis and Palestinians, including the dispute over the status of Temple Mount.