"He destroyed the two-state solution," Saeb Erekat, who long served as the Palestinians top negotiator, told journalists after Trump's speech.
Trump "disqualified his country from any role whatsoever" in the peace process, he said.
"As a chief Palestinian negotiator, how can I sit with these people if they dictate on me the future of Jerusalem as Israel's capital," he added.
Erekat warned that "it is really throwing the whole region into chaos, international chaos."
The two-state solution has long been the basis of international peace efforts for the conflict.
Israel claims all of Jerusalem as its undivided capital, while the Palestinians see the eastern sector of the city as the capital of their future state.
"I think tonight he is strengthening the forces of extremists in this region as no one has done before," Erekat said, referring to Trump.
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