A special US delegation attended the inauguration ceremony on Monday, which coincided with the 70th anniversary of Israel's founding.
The move infuriated Palestinians and sparked international condemnation.
Previous US presidents, as well as nearly every other country, refrained from opening embassies in Jerusalem, arguing that the city's final status should first be resolved through Israeli-Palestinian negotiations.
Palestinian leaders see East Jerusalem as the capital of their future state and have said that Trump's move disqualifies the US as a peace mediator.
While Israeli Prime Minister Benjamin Netanyahu said the embassy move marked a "glorious day", and as the US delegation posed for photos, hospitals in the besieged Gaza Strip called for urgent blood donations as Israeli forces fired live ammunition at unarmed Palestinians demonstrating for the right to return to the homes from which they were violently expelled from in 1948.
At least 52 Palestinians were killed, and more than 2,000 were wounded, according to health officials in Gaza.
Here's a round-up of statements from around the world regarding Monday's events:
The Cairo-based Arab League, comprising 22 member states, urged the international community to oppose what it considers an "unjust decision" and the ongoing "Israeli occupation" of Jerusalem
It called the embassy relocation a "blatant attack on the feelings of Arabs and Muslims" and a "grave violation of the rules of international law" that would destabilise the region.
Palestinians have asked for an urgent meeting at the Arab League on Wednesday to discuss the matter.
Egypt's al-Azhar religious institution meanwhile urged the international community to use "all peaceful means" to "dismiss positions of countries that sided with the Zionist entity," referring to Israel.
Zeid Ra'ad Al Hussein, the UN high commissioner for human rights, called for the immediate stop of Israeli live fire targeting dozens.
A statement read on Twitter: "Shocking killing of dozens, injury of hundreds by Israeli live fire in Gaza must stop now. The right to life must be respected. Those responsible for outrageous human rights violations must be held to account. The international community needs to ensure justice for victims."
Earlier, Antonio Guterres, secretary-general of the United Nations, expressed concern about "the high number of people killed" in Gaza.
Speaking to reporters in Austria's capital, Vienna, the UN chief said that the Gaza bloodshed showed the need for a political solution.
"There is no Plan B to a two-state solution in which Israelis and Palestinians can live in peace," Guterres said.
Iran's Foreign Minister Mohammed Javad Zarif called the US embassy opening in Jerusalem "a day of great shame".
"Israeli regime massacres countless Palestinians in cold blood as they protest in the world's largest open air prison," he wrote on Twitter.
"Meanwhile, Trump celebrates move of US illegal embassy and his Arab collaborators move to divert attention".
Last week, Trump defied last-ditch efforts by European allies and withdrew the US from a multinational nuclear agreement signed with Iran in 2015.
"Definitely their measures on moving their embassy from Tel Aviv to Jerusalem and Iran's nuclear issue will not go unchallenged," Ali Larijani, the speaker of Iran's parliament, said on Monday, warning that the relocation would inflame tensions in the Middle East.
"These sorts of actions will increase tension in the region and the world," Iran's semi-official ISNA news agency quoted Larijani as saying.
Larijani urged Muslim countries to take more serious measures in response to Trump's "wrong and unwise decision".
Lebanese Prime Minister Saad Hariri wrote on Twitter that he regrets "this decision that is igniting the anger of millions of Arabs, Muslims and Christians".
He said Lebanon denounces the "provocative" decision that is deepening the conflict and allowing the "Israelis to spill more blood of innocent Palestinians and increases the intensity of extremism that threatens the world community".
Lebanon's Hezbollah group called the US decision a unilateral step "that Palestinians will not accept, and therefore it is worthless".
The group's deputy leader, Sheikh Naim Kassem, made his comments in a speech in Beirut on Monday marking the 70th anniversary of what Arabs refer to as the Nakba or "Catastrophe", when hundreds of thousands of Palestinians fled or were expelled from what is now Israel during the 1948 war around Israel's creation.
"God willing, the Nakba that happened 70 years ago will be a motive for change and liberation," Kassem said.
Late on Monday evening, Ankara announced that it will be recalling its ambassadors in Washington and Tel Aviv.
"What Israel is doing is a genocide," Turkish President Recep Tayyip Erdogan said, according to state-run Anadolu news agency. "Israel is a terrorist state."
Deputy Prime Minister Bekir Bozdag said Turkey will call for a UN General Assembly meeting, as he announced that three days of national mourning will be held to commemorate the Palestinian demonstrators killed in Gaza.
Ibrahim Kalin, spokesman for the Turkish president, called the deaths of Palestinians in Gaza "another dark spot, another crime added to Israel's wall of shame".
Kalin took to Twitter to criticise the international community for its silence "in the face of this systematic barbarism".
Turkey's Foreign Minister Mevlut Cavusoglu called Israel's actions "state terror".
The Turkish foreign ministry said in a statement the embassy move violated international law and damaged the peace process.
In a statement published late on Sunday, Erdogan said the relocation served to "reward" the Israeli government despite it undermining efforts to resolve the decades-long conflict, while it "punished" Palestinians.
"History and humanity will never forgive the injustices done to our Palestinian brothers," Erdogan said.
Kuwait called for an emergency UN Security Council meeting for Tuesday.
Palestinian Ambassador Riyad Mansour urged the council Monday to condemn the killings. Mansour called the Israeli military response a "savage onslaught" and an "atrocity".
The council held an emergency meeting when the protests began in March. Members then urged restraint on both sides but could not agree on any action or joint message.
Pakistan's foreign ministry said in a statement that the embassy move to Jerusalem violates international law and several UN Security Council resolutions, in particular resolutions 476 and 478.
"The government and people of Pakistan stand firmly with the Palestinian people," the statement read.
"Pakistan also renews its call for establishment of a viable, independent and contiguous State of Palestine, on the basis of internationally agreed parameters, the pre-1967 borders, and with al-Quds al-Sharif as its capital."
Federica Mogherini, the European Union's foreign policy chief, called on Israel to respect the "principle of proportionality in the use of force" after Israeli soldiers shot and killed dozens of Palestinians in Gaza.
Mogherini said that all should act "with utmost restraint to avoid further loss of life" and added that "Israel must respect the right to peaceful protest".
She also insisted that Hamas, which runs the enclave, must make sure demonstrators in Gaza are peaceful and "must not exploit them for other means".
Some European foreign ministers said that Trump's decision to relocate the embassy was unwise and likely to exacerbate tensions.
Ireland's Foreign Minister Simon Coveney said the move "is inflaming already a very tense situation, and the relationship between Israelis and Palestinians."
His Dutch counterpart, Stef Blok, said: "we don't consider it a wise decision to move the embassy".
The German government expressed deep concern about the dozens of Palestinians killed by Israeli troops in Gaza, urging Israel to refrain from using live munitions except as a last resort.
"The right to peaceful protest must also apply in Gaza," a foreign ministry spokeswoman said. "Israel has the right to defend itself and secure its [border] fence against violent intrusions, but the principle of proportionality applies."
That meant that live munitions should only be used when other, weaker forms of deterrence had proven unsuccessful and specific threats were present, the spokeswoman added.