"Taking such a step throws particularly this region into a ring of fire. What would you like to do [with this step], Mr Trump? What kind of stance is it?" Erdogan said on Thursday, at Esenboga Airport in the capital Ankara, before leaving for a visit to Greece.
Breaking with decades of US policy, Trump on Wednesday announced the transfer of American embassy from Tel Aviv to Jerusalem, formally recognising the contested city as the capital of Israel despite widespread international opposition.
"I have determined that it is time to officially recognise Jerusalem as the capital of Israel," he said in a speech in Washington.
Ignite a 'powder keg'
US analysts say Trump's announcement might risk igniting a "powder keg" at the heart of the Israel-Palestine conflict.
"Jerusalem has a tendency to explode when you fool around with the status quo," said Aaron David Miller, vice president at the Woodrow Wilson Center and a former Middle East adviser to the Clinton and Bush administrations.
The Turkish president, who had earlier warned that the status of Jerusalem was a red line for Muslims, said that the US decision disregarded a 1980 United Nations resolution regarding the status of the city.
He added that political leaders should work to bring peace, not stir things up.
Calling Jerusalem "also a sanctuary for Christians", Erdogan added that he would speak to Pope Francis about Trump's decision this evening or on Friday.
Turkey will host an extraordinary meeting of the Organisation of Islamic Countries (OIC) on December 13 to discuss the US move.
Jerusalem at the core of the conflict
Jerusalem remains at the core of the Israel-Palestine conflict, with Palestinians hoping that East Jerusalem might eventually serve as the capital of a future Palestinian state.
Israel illegally occupied Palestinian territories in the 1967 war, including East Jerusalem in defiance of the international community, and wasted no time in declaring the city as its "eternal, undivided" capital.
Trump had promised to move the US Embassy from Tel Aviv to Jerusalem during his election campaign.
Saeb Erekat, the chief Palestinian negotiator, said Trump "destroyed any possibility of peace" and was "pushing this region towards chaos [and] violence".
"He is destroying all moderates in the region and giving power to extremists," Erekat told Al Jazeera.
"This is the most dangerous decision that any US president has ever taken."
Erekat said it is "meaningless" to have a Palestinian state without Jerusalem as its capital.