Rabbi Ovadia Yosef, the former leader of the Sephardic Jewish community, died earlier on Monday at the age of 93.
Orthodox Jews wearing black clothing congregated outside the seminary where Rabbi Ovadia Yosef studied. Israeli police said more than 500,000 people were participating in the funeral.
An ambulance service spokesperson said 40 people had received minor injuries.
Crowds of people could be seen surrounding the van carrying Rabbi Ovadia Yosef’s body. Streets have been closed off and thousands of additional police deployed.
Rabbi Ovadia Yosef was a leading Torah scholar and arbiter of Halacha, or Jewish law.
He was also the spiritual leader of the Shas party, which he founded in 1984 to boost representation for Jews of Middle Eastern and North African origin.
Until then, Israel’s government and religious institutions had tended to be dominated by Ashkenazi Jews – those of European descent.
Though it is currently in opposition, Shas became a kingmaker in several coalition governments.
Shas leader Arye Deri wept uncontrollably as he expressed his grief.
“How will we remain alone. Who will lead us,” he asked, referring to the rabbi as “our father”.
Israel’s President Shimon Peres had visited the rabbi in hospital as his condition deteriorated on Monday.
The president and PM Benjamin Netanyahu were both present for the funeral, which is taking place on the day of the rabbi’s death in accordance with Jewish custom.
Benjamin Netanyahu expressed “deep sorrow” at the news of Rabbi Yosef’s death, describing him as “among the greatest rabbis of our generation”.
“Rabbi Ovadia was a giant in Torah and Jewish law and a teacher for tens of thousands,” the prime minister said in a statement.
“The Jewish People have lost one of the wisest men of this generation.”
The Iraqi-born cleric was also known for his controversial comments about Arabs, secular Jews, liberals, women and gay people.
Rabbi Ovadia Yosef once likened Palestinians to snakes, and in 2010 called for Palestinian Authority President Mahmoud Abbas to “vanish from our world”.
However, he also encouraged Israeli politicians to engage in the peace process with the Palestinians and by abstaining, helped secure the passage of the first Oslo peace accord through the Knesset.
President Mahmoud Abbas, meeting visiting Israeli MPs in Ramallah on Monday, asked them to send his condolences to Rabbi Yosef’s family.
Rabbi Ovadia Yosef ‘s son, Yitzhak Yosef, is the Sephardic Chief Rabbi of Israel.