"Transferring the US embassy to Jerusalem would be a public and more-explicit-than-ever declaration of war against Islam," he said in a statement.
In a break with previous administrations, new US President Donald Trump has pledged to recognise Jerusalem as Israel's capital and relocate the US embassy there from Tel Aviv.
Sadr, a firebrand Shiite cleric whose militia once fought US occupation forces in Iraq, called for the "formation of a special division to liberate Jerusalem were the decision to be implemented."
The Najaf-based cleric also called "for the immediate closure of the US embassy in Iraq" should Washington go ahead with its promised embassy transfer in Israel.
Sadr supporters protesting against the lack of services and widespread corruption in the Iraqi state stormed the so-called "Green Zone" in Baghdad twice last year.
The protesters entered the parliament buildings and the prime minister's office but did not attempt anything against the US embassy there, which is Washington's largest foreign mission.
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