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In 1948, there were (and still are) two parts to Jerusalem, the Old City, which is relatively small and surrounded by walls, and the New City which stretches out more to the west of the Old City than to the east. In the Armistice ending the Arab-Israeli War of 1948-9 between Israel and Jordan. Israel controlled only the Western part of the New City of Jerusalem. Jordan controlled both the Eastern part of the New City of Jerusalem and the entire Old City of Jerusalem. In 1967, Israel won the Six Day War and extended its control over the entire city. In the UNSC Resolution 242 which ended the conflict, Israel would hold any conquered Jordanian territory (including, but not limited to the Old City and Eastern New Jerusalem) in trusteeship pending a final peace agreement. In 1994, Jordan and Israel did enter a final peace agreement, but instead of taking back all of the conquered territory, Jordan decided to cede its right to claim that territory to the Palestinian Authority. Since there is no lasting peace agreement between Israel and the Palestinian Authority, Israel still maintains trusteeship over the city. However, in contravention to international law, Israel passed the Jerusalem Law effectively annexing the Jordanian/Palestinian-entitled areas to its own territory.

Simple Answer:

Internationally - Legally divided between the two with the Old City belonging to the Palestinians.

De Facto and According to Israeli Law - Controlled entirely by Israel as a unified city.

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