In 2013, the Israeli Supreme Court ruled in favour of the Jewish claimants, who subsequently sold the property on to unspecified owners.
On Tuesday morning, police were deployed to the Sheikh Jarrah district as officials evicted the Shamasnehs. The family of six, one of whom is in his 80s, left the house and sat outside with activists, local media said.
During the eviction family members were heard to shout, “This is the face of the occupation. This is the racist government.” One activist held a sign that read: “Enough with the occupation” and, “Jews and Arabs refuse to be enemies.”
Shortly after the eviction, the Associated Press reported that Jewish settlers entered the house accompanied by a private security guard. An Israeli flag hung in the entranceway to the kitchen, according to the news agency.
The Israel Land Fund identified a descendant of the land's original owners and helped her reclaim the property through the Israeli courts. It was subsequently sold to another Jewish family. In 2013, Israel's Supreme Court threw out an appeal by the Shamasnehs.
"The eviction of the Shamasneh family, who resided in the house since 1964, is not only brutal but it is also indicating a dangerous trend that could threaten a future compromise in Jerusalem," a statement from the Peace Now group read.
The family's case was backed by pro-Palestinian rights groups and international figures, including former US President Jimmy Carter.
Palestinians say the Israeli law allowing Jewish property reclamation is discriminatory since no such law exists for Palestinians, some 800,000 of whom fled or were expelled from what became Israel.
Yonatan Yosef, a spokesman for the Jewish residents of the Sheikh Jarrah neighborhood in East Jerusalem, told the AP that he was pleased to see another home "redeemed".
"Another house in the Land of Israel, another house in Jerusalem, close to the Western Wall, close to the Old City, close to the Temple Mount, which is the heart of the people of Israel," he said. "We hope that all the houses in this neighbourhood...will return to Jewish hands."
According to the European Union, at least 180 households in East Jerusalem face threats of eviction.