Last month, the Association for Civil Rights in Israel issued "an urgent plea" to authorities to keep the Ras Khamis checkpoint open, saying its closure would force tens of thousands of Palestinians to use a single crossing, two kilometres (more than a mile) away.
Police spokeswoman Luba Samri confirmed the checkpoint had been closed.
"Today, on the basis of a court decision, the Ras Khamis checkpoint was officially closed after expanding and organising the Shufat checkpoint, to improve the quality of traffic services and facilitate movement for citizens and those who want to go from or to Jerusalem."
The 65,000 residents of the Shufat refugee camp will now be required to pass through a single checkpoint, which a court ordered authorities to expand in anticipation of the closure of the Ras Khamis crossing.
But activists say the court-ordered expansion was not carried out and that funnelling commuters through a single checkpoint will lead to massive overcrowding and contribute to cutting the camp's residents off from Jerusalem.
Israel is planning to continue the construction of its controversial security barrier through the site of the now-defunct Ras Khamis crossing.
Activists have decried the route, which will leave tens of thousands of Palestinian residents who hold Jerusalem identity cards outside of the city, behind the barrier.