At least 58 Palestinians were killed and more than 2,700 injured in Gaza as deadly protests took place ahead of, during and after the ceremony in Jerusalem, making it the deadliest day there since the 2014 Gaza war.
The violence could deepen Tuesday, when Palestinians mark what they call the "Nakba," or Catastrophe, in memory of the more than 700,000 Palestinians who were either driven from or fled their homes during the Arab-Israeli war that accompanied the creation of the state of Israel in 1948.
On Monday, which marked the 70th anniversary of the founding of the state of Israel, US and Israeli leaders hailed the embassy move as a sign of the enduring relationship between the two countries and of US trustworthiness. American officials said it could create an honest foundation for an eventual peace agreement between Israelis and Palestinians.
President Donald Trump did not attend the ceremony in Jerusalem's Arnona neighborhood, but in a video message broadcast at the event he congratulated Israel, saying the opening had been "a long time coming."
"Today, Jerusalem is the seat of Israel's government. It is the home of the Israeli legislature and the Israeli supreme court and Israel's Prime Minister and President. Israel is a sovereign nation with the right, like every other sovereign nation, to determine its own capital, yet for many years we failed to acknowledge the obvious, the plain reality that Israel's capital is Jerusalem," Trump said in the prerecorded remarks.
"As I said in December, our greatest hope is for peace," he added.
But that hopeful vision made for a jarring juxtaposition with the climbing death toll in Gaza, televised images of Palestinians running from gunfire and the decision by the Pentagon and State Department to boost the Marine Corps presence at US embassies across the Middle East and Africa.
The celebratory air at the official opening ceremony in Jerusalem's Arnona neighborhood also contrasted sharply with calls from international leaders who expressed alarm at the spike in violence and appealed for calm, with some US allies denouncing the US decision to break with international norms by moving the embassy.
France expressed its official disapproval. South Africa pulled its envoy from Tel Aviv, while Turkey pulled its ambassadors from both Washington and Tel Aviv. President Recep Tayyip Erdogan told an audience in London that the US prefers "to become part of the problem rather than the solution" and that it "has lost its role as mediator in the Middle East peace process."
Israeli Prime Minister Benjamin Netanyahu thanked Trump for his support on Twitter hours ahead of the opening ceremony.
"What an amazing day! Thank you, @POTUS Trump," Netanyahu said while retweeting a Twitter post from Trump.
The opening of the embassy happened a day after Israel celebrated Jerusalem Day, marking what Israelis consider the reunification of the city.
Speaking at the ceremony, Netanyahu hailed the alliance between America and Israel as "stronger than ever."
"What a glorious day. Remember this moment. This is history," he said.
"President Trump, by recognizing history, you have made history. All of us are deeply moved; all of us are deeply grateful."
Outside the embassy, police and protesters clashed as tensions ran high.
Fourteen protesters were arrested for confronting police officers and interrupting public order, Jerusalem police said.