The draft, which was drawn up by the Palestinian delegation, was approved by Arab foreign ministers at an eve-of-summit meeting in the Jordanian Dead Sea resort of Sweimeh.
Arab League member states "reaffirm their commitment to the two-state solution and to the right of the State of Palestine to restore its sovereignty over the territories occupied in 1967, including east Jerusalem," the draft says.
It calls on "all countries to respect UN Security Council resolutions that reject Israel's annexation of occupied east Jerusalem" and "not to move their embassies" from Tel Aviv to the Holy City.
Since taking office in January, Trump has indicated he is willing to break with decades of US policy by moving the embassy and being open to a one-state solution to the Israeli-Palestinian conflict if both sides agree it.
Palestinian president Mahmud Abbas is to join other Arab leaders at Wednesday's summit. Next month, he heads to the White House for his first meeting with Trump.
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