At least 41 Palestinians have been killed and 1,800 wounded by Israeli troops in clashes on the Gaza border, according to Palestinian officials.
The violence came as the US opened its embassy in Jerusalem, a controversial move that has infuriated Palestinians.
President Donald Trump told the opening ceremony via videolink that Israel is a sovereign nation with the right to determine its own capital, but for many years the U.S failed to recognize the obvious.
Palestinians hurled stones and incendiary devices while the Israeli military used snipers, as black smoke poured from burning tyres.
The status of Jerusalem goes to the heart of the Israeli-Palestinian conflict.
Israeli sovereignty over Jerusalem is not recognized internationally and, according to the 1993 Israel-Palestinian peace accords, the final status of Jerusalem is meant to be discussed in the latter stages of peace talks.
Various countries once had embassies based in Jerusalem but many moved after Israel passed a law in 1980 formally making Jerusalem its capital.