Trump's decision and his plan to move the US embassy to Jerusalem sparked violence in Jerusalem, with a fifth day of protests in the Middle East.
"Both Russia and Turkey believe that the decision... does not help regulating the situation in the Middle East but instead destabilises the already complicated atmosphere," Putin said during a press conference in Ankara yesterday.
"It can derail the Israel-Palestine peace process," he warned after his meeting with Erdogan following lightning visits to Syria and Egypt earlier in the day.
"Israel is using this as an opportunity to further increase the pressure and violence against Palestinians," he added.
Putin earlier in Cairo stressed the importance of "the immediate resumption of Palestinian-Israeli talks over all disputed issues, including the status of Jerusalem".
The Turkish head of state bitterly opposes Trump's decision and has sought to mobilise the Muslim world against it, calling a summit of Islamic countries on December 13 in Istanbul.
Erdogan, who regards himself as a champion of the Palestinian cause, said the "struggle" of Muslims would not end until there is an independent Palestinian state.
"With this recognition of Jerusalem as the capital of Israel, it (the United States) has become a partner to this bloodshed. We do not recognise this decision, we will not," he added.
Turkey had high hopes for bilateral relations under the Trump presidency, but ties have frayed with rows over the Syria conflict, a New York legal case and now Jerusalem.
Erdogan said that the current "vandalism and cruelty" in Jerusalem would not last. "Those who think they own Jerusalem today will not find trees to hide behind," he said.
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