The decision has drawn near global condemnation and deeply angered the Palestinians, who have refused to meet with Pence on his visit.
US President Donald Trump will formalize his recognition of Jerusalem as Israel's capital by transferring the US embassy there from Tel Aviv in 2019, vice president Mike Pence told the Israeli parliament.
U.S. Vice President Mike Pence shakes hands with Israeli Prime Minister Benjamin Netanyahu during a meeting at the Prime Minister's office in Jerusalem January 22, 2018. And they were quite rapidly escorted out of the room in sort of a rough way.
His visit is the final leg of a trip that has included talks in Egypt and Jordan.
Pence called the decision to recognize Jerusalem as Israel's capital "in the best interest" of peace, saying that "fact is the only basis for peace". The signs were quickly taken away by other assembly members and security, prompting the protesting lawmakers to leave.
Israel gave Pence the sort of welcome usually reserved for a president.
Pence added that he was hopeful that the USA had helped spur a "new era of renewed discussions" about regional peace.
Abdullah expressed concerns about the regional fallout from the Jerusalem decision.
She reasserted the EU's "firm commitment" to the two-state solutions, with Jerusalem as the shared capital of Israel and Palestine.
"Jerusalem is Israel's capital", he stated.
Indeed, Egyptian President Abdel Fattah el-Sisi, who to my eyes appears to be some kind of soulmate to President Trump, said his country would "spare no effort" in working toward a two-state solution.
Jordan lost East Jerusalem and the West Bank to Israel during the Arab-Israeli war in 1967.
Symmetrically, in Brussels, Abbas has chosen to ask Europe's foreign ministers to recognize Palestine as a state.
The European Union it seems has always had close relations with the Palestinians so Mr Abbas will be looking to them to replace the U.S. as an honest broker for peace. And time is running out on this reality check, too; the Sunni states that have exploited the Palestinians for their own internal purposes are much too busy with the other nightmare left by the Obama administration - a rising Iranian state that seeks to dominate the region, both militarily and religiously.
Mr Pence said the American administration urged the Palestinians to return to negotiations.
After the meeting, Pence said the dialogue was cordial and said that it's okay to have occasional disagreements with friends.
"The messianic discourse of Pence is a gift to extremists and has proven that the U.S. administration is part of the problem rather than the solution, " said the Palestinian Authority's chief negotiator, Saeb Erekat.
He has however pushed for an internationally led process. "They attacked us in a savage way but this came in our favour because even though they assaulted us, the worldwide media gave attention to this scene and recognised there is a voice in Jerusalem that says Jerusalem is the capital of Palestine".