"Taking this type of step puts the world, especially the region, in a ring of fire," Erdogan said in a speech to supporters at Ankara airport before heading on a visit to Greece.
"Hey Trump! What do you want to do?" he said, addressing the US leader directly in one of Erdogan's most familiar rhetorical habits.
"What kind of approach is this? Political leaders do not stir things up, they seek to make peace!" he added.
In a speech on Wednesday, Trump overturned decades of US policy with a decision to recognise the disputed city. He also kicked off the process of moving the US embassy from Tel Aviv to Jerusalem.
Erdogan accused Trump of trying to be an agitator and said the decision "completely disregarded" the 1980 UN resolution on the contested city's status.
Turkey will hold a leaders' summit of the Organisation of Islamic Cooperation (OIC) on Wednesday in Istanbul to discuss Trump's decision.
Erdogan said work continued for other events planned for after this summit but he did not give further detail.
Around 1,500 people gathered outside the US consulate in Istanbul on Wednesday night to protest against Trump, chanting slogans such as "down with America!".
Erdogan said he was due to speak with Pope Francis on Thursday evening or on Friday, as well as with Russian President Vladimir Putin and Western allies including Germany.
"This is now not just the duty of Muslims, but also of humanity" to oppose the move, Erdogan added.
He hit back at Trump saying that being strong did not mean that you were automatically right but that "the righteous are the strong".
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