After brutally suppressing the Bar-Kokhba Revolt, Hadrian proceeded with his plans to rebuild Jerusalem as a pagan Roman city called Aelia Capitolina. Hadrian, whose full name was Publius Aelius Hadrianus, followed the precedent established by Alexander the Great centuries earlier and gave the refounded city his own name. Capitolina refers to Capitoline Jupiter, who replaced the God of Israel as the city's patron deity. The name Aelia stuck for centuries; even under Muslim rule (after 640 C.E.), the city sometimes was referred to as “Ilya.” Aelia Capitolina was a pagan city in more than name alone. In punishment for the Bar-Kokhba Revolt, Hadrian prohibited Jews from living in Aelia Capitolina and its environs, a ban that remained in effect for at least a couple of generations. Instead, Hadrian populated the city with Roman military veterans. The Tenth Legion was stationed in Aelia Capitolina until the emperor Diocletian transferred it to Aila (modern ʿAqaba) on the Red Sea around 300 C.E.

Hadrian gave Aelia Capitolina a typical Roman city plan: a roughly square layout, with the four sides of the square oriented toward the cardinal points, and one main gate in the center of each side. These gates gave access to two main roads that bisected the city from north to south and east to west, and intersected in the center. Other roads were laid out parallel to the two main roads, creating a grid of streets running north-south and east-west. The Romans called a north-south road a cardo, and an east-west road a decumanus. The main north-south road was the cardo maximus, and the main east-west road was the decumanus maximus. This type of city plan is related to the layout of Roman military camps, like those at Masada. It represents an adaptation of the Hippodamian town plan common in the Hellenistic world, which had a grid of streets running north-south and east-west, but did not have a regular (square) layout or two main roads bisecting the city.