Guatemalan President Jimmy Morales and Israeli Prime Minister Benjamin Netanyahu attended the embassy's opening on Wednesday in an office complex in west Jerusalem.
The opening comes almost 30-years after the UN ordered Guatemala and 13 other nations to relocate their embassies from Jerusalem to Tel Aviv. Besides Guatemala, Paraguay says it will also relocate its embassy to Jerusalem and Romania, the Czech Republic and Honduras have said they are considering doing the same. "You were the second country to recognize Israel", the prime minister said, referring to Israel's founding in 1948.
No country recognised Jerusalem as Israel's capital until December 2017, when Trump declared it as such, breaking with decades of USA policy favouring the division of Jerusalem between Israel and a future Palestinian state.
Jerusalem's status is perhaps the thorniest issue in the Israeli-Palestinian conflict and the U.S. embassy relocation infuriated the Palestinians.
Netanyahu declared that the move was in line with Guatemala's close friendship with Israel.
Israel captured east Jerusalem in the 1967 Mideast war, but it is not recognised by global community. That move caused some tension because both Israel and Palestinians claim Jerusalem as their capital. The Israeli forces killed almost 60 Palestinians in the clashes along the border this Monday.
On Wednesday, a day after expelling Israel's ambassador in response to the Gaza deaths, Turkey ordered the Israeli consul general in Istanbul to return home.
On Monday, tens of thousands had gathered near the border while smaller numbers of stone-throwing Palestinians approached the fence and sought to break through, with Israeli snipers positioned on the other side.
"The Guatemalan government has chosen to stand on the wrong side of history, to side with violations of global law and human rights, and to take a hostile step against the Palestinian people and the Arab world", he wrote in a statement. It was the bloodiest day in the Hamas Islamist-run enclave since a 2014 war with Israel.
"We are not surprised that a president that has objected to United Nations investigations into corruption and abuses of power has chose to further violate global resolutions". Marking the move, the Jerusalem municipality illuminated the walls of the Old City walls late Tuesday with flags of Guatemala, Israel and the United States and a message thanking Morales. "My next trip through Latin America goes through Guatemala", Netanyahu added, going on to state that Israel and Guatemala share values, and saying that the concepts of personal liberty and the rule of law were born in Jerusalem.