An argument broke out Saturday between Muslim and Jewish residents in Acre near the city's pre-military yeshiva.
Yeshiva students were holding Simchat Torah processions in the area.
Police were investigating suspicions that the yeshiva's security guard fired shots into the air.
Large forces of police streamed to the neighborhood, accompanied by the mayor and at least one local Knesset member to try to calm the waters in the mixed Arab-Jewish coastal city.
Police confiscated a weapon that they suspected was fired and took it to police laboratories for examination. Within an hour after the fracas was reported to police, the crowds had dispersed without any reports of injuries or property damage.