The Old City has much to offer, with the narrow, colourful souk that follows the Street of the Chain from Jaffa Gate into the Muslim Quarter. Tiny open-fronted shops sell souvenirs of olive wood, silverwork, mother-of-pearl, leather and hand-blown glass. Arabic sweets and pastries are also plentiful. Bargaining here is standard practice and shoppers can generally get about one quarter off the asking price. As the Muslim Quarter leads into the Christian Quarter, souvenirs take the form of religious artefacts.

Continuing into the Old City's Jewish Quarter, the Cardo has several exclusive shops selling clothing and objets d'art. Several hundred shops are listed by the Ministry of Tourism and display a special emblem as a symbol of fair pricing. These carry a range of goods from exclusive jewellery and diamonds to oriental carpets, ladies' wear and leather goods. Bargaining is not usual in Jewish shops and markets, although asking for a ‘discount' on some credible pretext can sometimes bring an immediate price reduction.

In the city centre (west Jerusalem), shops and streets are much the same as in southern Europe. For traditional crafts and Judaica head for the House of Quality, the Hutzot Hayotser Arts and Crafts Lane, and the ultra-Orthodox Mea Shearim area. The city's busiest shopping thoroughfare is chaotic Jaffa Street. There are also large shopping malls, such as Jerusalem Mall in Malcha Street.

Shopping in east Jerusalem maintains a strongly Arabic, Middle Eastern feel. The hub of this district is Damascus Gate, where traders gather daily, from dawn to dusk, to sell anything from household wares to fresh farm produce. This market is full of life and bustle and (unlike the markets of the Muslim Quarter) sells to locals as well as tourists.

Opening hours for shops are generally Sunday to Thursday 0900-1900 (some close daily between 1300 and 1600). Jewish-owned businesses, including almost all shops in west Jerusalem, are closed on Friday afternoon and Saturday for Shabbat. The Muslim Quarter and east Jerusalem are also quieter on Saturday. Trading on Friday, the Muslim holy day, is also quite restrained. Christian-owned shops close on Sundays.

Value Added Tax (VAT), at a current rate of 15.5%, is quoted in the price of all goods and services. Tourists buying goods at shops listed by the Ministry of Tourism may be entitled to claim the tax back, provided the purchase cost US$100 or more and payment was made in foreign currency. Shoppers must obtain a special invoice form at the time of purchase. The form must be filled out and submitted at the airport and the refund is generally issued by post.