Palestinian president Mahmud Abbas vowed the initiative unveiled in Washington would fail.
"This conspiracy deal will not pass. Our people will take it to the dustbin of history," he said after a meeting in the West Bank city of Ramallah of various Palestinian factions including Islamist group Hamas, which pledged to "resist the deal in all its forms".
Trump's proposal included a long list of measures directly in line with Israeli interests, notably recognition of Jerusalem as the "undivided capital" of the Jewish state.
"If Jerusalem is not the capital of the Palestinian state, how will we accept that?" Abbas asked, stressing that it was "impossible for any child, Arab, Muslim or Christian," to do so.
Senior Hamas official Khalil al-Hayya said the Islamist group which controls Gaza would never "accept any substitute for Jerusalem as the capital of the Palestinian state".
"We warn the whole world not to go along with this deal," he said.
Trump's plan triggered immediate condemnation on the streets of the Gaza Strip and the West Bank, with demonstrations expected to continue through the week.
Thirteen people were wounded in the West Bank in clashes with the Israeli army on Tuesday, the Red Crescent said.
One person was taken to hospital after being hit with a rubber bullet, while 12 others were suffering from exposure to tear gas, a spokeswoman said.
An AFP reporter said around 200 Palestinians confronted Israeli forces near Ramallah, burning photos of Trump and Israeli Prime Minister Benjamin Netanyahu. AFP
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