Thousands of demonstrators had travelled to the Palestinian territory's land border with Israel to protest President Trump's move, but they were met with violence from Israeli troops, which included tear gas being dropped on them.
Palestinians argue the embassy move delays or scuttles peace efforts.
"We are ecstatic to be able to celebrate Israel in this way", Naomi Adler, president & CEO of the Jewish Federation of Greater Philadelphia, said. "Today, we acknowledge that by putting our embassy here". None of the Israeli soldiers were hurt.
At the barrier, young men threw stones and tried to launch kites carrying flames in hopes of burning crops on the other side.
Trump's rash decision to move the USA embassy now has not only provided another cause for tragic violence in the region, it has thrown more obstacles in the way of a true peace process.
It was the highest Palestinian death toll in a single day since Hamas-led demonstrations began along the border fence on March 30; and the highest number of casualties inflicted since the 2014 conflict with Israel inside Gaza.
"It is the right of any nation to defend their border, but this is a devastating one-sided loss of life", she said. We would condemn the violence that has occurred.
Meanwhile, Israeli prime minister Benjamin Netanyaho has hailed Trump's decision a milestone. "It was over 20 years since Congress passed the Jerusalem Embassy Act and the president is making good on it now".
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It also said that any decisions and actions "which purport to have altered the character, status or demographic composition of the Holy City of Jerusalem have no legal effect" - a reference to the United States decision to recognize Jerusalem as Israel's capital. The opening had been timed to coincide with Israel's Independence Day.
Palestinian President Mahmoud Abbas said: "This is not an embassy; it's a USA settlement outpost in Jerusalem".
South Africa and Turkey have recalled their ambassadors to Israel and the United States for "consultations".
Lindsey Graham (R-S.C.) thanked President Donald Trump for recognizing Jerusalem as Israel's capital, a designation he suggested God supported.
"Today, Jerusalem is the seam of Israel's government". It is a heavily contested and disputed part of any future settlement, and I think that has come to fruition.
"If you got a problem with Jerusalem being the capital of Israel, take it up with God", he told Fox News.
He said: "Unfortunately, the United States has arrogantly stood by the Israeli administration which kills civilians and has partnered in this crime against humanity".
The Green Party also said it "strongly condemned the slaughter perpetrated by the Israeli armed forces".
The relocation of the embassy on Monday sparked protests in Gaza, with Israeli forces killing dozens of demonstrators, including children.
The embassy's status has been a central point of contention in peace talks for decades.