The ceremony took place amid violent protests on the Israeli-Palestinian border where dozens were killed by Israeli gunfire.
The US Embassy in Jerusalem is open for business. Administration officials have dismissed Palestinian criticism, portraying the embassy opening as an essential step toward an eventual Israeli-Palestinian peace deal.
At the embassy ceremony in Jerusalem, Trump son-in-law and chief Mideast adviser Jared Kushner placed the blame on the Gaza protesters.
Florida Governor Rick Scott attended the ceremony in Jerusalem.
"Yet for many years, we've failed to acknowledge the obvious, the plain reality that Israel's capital is Jerusalem".
Protest leaders are calling for the right of return for Palestinian refugees to the areas they fled or were driven from their homes with the creation of Israel in 1948.
The move infuriated the Palestinians, who seek to establish a future capital in Israeli-annexed east Jerusalem.
Critics have faulted Israeli forces for using live fire, while Israel says its actions are necessary for security as people threaten the border fence.
France also spoke out against the U.S. move, saying along with many other critics that it violated "unambiguous" global law and UN Security Council resolutions.
The move of the U.S. Embassy is seen in Israel as a transformative event breaking decades of U.S. neutrality on Israeli-Palestinian relations. "We have the greatest love for the president, and we will win", the team's statement said, per The Jerusalem Post.
The Palestinian Health Ministry said more than 1,600 had suffered injuries, and that numerous dead had not yet been identified.
Israel says it has the right to defend its borders, protect its citizens and prevent illegal infiltration.
The occupied territories have witnessed new tensions ever since US President Donald Trump on December 6, 2017 announced US recognition of Jerusalem al-Quds as Israel's "capital" and said Washington would move US embassy to the city.
Even though the protests can be very unsafe, the Palestinian people say "they have so little to lose".
Israelis began celebrating on Sunday, as tens of thousands of marched in Jerusalem, some holding American flags, to mark Jerusalem Day.
Over 35,000 protesters marched towards the border fence, coming within several hundred metres.