- Seven protesters in the Gaza Strip were injured, with one in a critical condition
- Live fire injured four in the West Bank and 20 more were hit by rubber bullets
- The leader of Hamas has called for a new armed uprising in Gaza
In the West Bank cities of Hebron and Al-Bireh, thousands of demonstrators rallied with chants of "Jerusalem is the capital of the state of Palestine", according to witnesses.
Soldiers had used "riot-dispersal gear" against hundreds of rock-throwers, a military spokeswoman said.
In the Gaza Strip, dozens of protesters gathered near the border fence with Israel and threw rocks at soldiers on the other side.
Seven protesters were wounded by live fire, one was in a critical condition, the health ministry said.
Four people were wounded by live gunfire in the West Bank and another 20 were hit by rubber bullets, according to health officials.
An Israeli military spokeswoman had no immediate comment.
Palestinian authorities called a general strike in protest at US President Donald Trump's announcement about Jerusalem on Wednesday.
The leader of the Hamas militant group, which runs Gaza, called for a new armed uprising in a widespread show of anger, as the demonstrators torched American and Israeli flags.
Three 'days of rage' begins
In the West Bank town of Bethlehem, troops fired water cannons and tear gas to disperse a crowd in clashes that could cloud the upcoming Christmas celebrations in the town of Jesus's birth.
In Ramallah, the seat of the Palestinian Government, protesters set tires on fire, sending a thick plume of black smoke over the city.
Mr Trump's dramatic break on Wednesday with decades of US policy on Jerusalem counters long-standing international assurances to the Palestinians that the fate of the city will be determined in negotiations.
The Palestinians seek Israeli-annexed east Jerusalem, captured by Israel in 1967, as a future capital.
Palestinians closed their schools and shops on Thursday to begin three "days of rage" over Mr Trump's decision.
Rallies were underway in other West Bank cities, and a demonstration was being held outside the Damascus Gate of Jerusalem's Old City.
In the Gaza Strip, Hamas' leader Ismail Haniyeh called on Palestinians to launch a new intifada, or uprising, against Israel on Friday.
"The American decision is an aggression on our people and a war on our sanctuaries," Mr Haniyeh said in a speech, urging supporters "to be ready for any orders."
"We want the uprising to last and continue to let Trump and the occupation regret this decision," he said.
The Israeli military said two rockets were fired from Gaza but fell short, landing in Palestinian territory.
A Jihadist Salafi group in Gaza called the Al-Tawheed Brigades — which does not heed the call from the enclave's dominant force, Hamas, to desist from firing rockets — claimed responsibility for the launches.
Hamas, a group that seeks Israel's destruction, killed hundreds of Israelis in suicide bombings and other attacks in the early 2000s. But the group's capabilities are more limited now.
Gaza, Hamas's stronghold, is closed by an Israeli blockade, while in the West Bank, many of its members have been arrested.
Nonetheless, it possesses a large arsenal of rockets in Gaza capable of striking much of Israel.
The Israeli military said it would deploy several battalions to the West Bank ahead of Friday, while other troops have been put on alert to address "possible developments".
Palestinian President decries 'unacceptable crime'
Meanwhile, the Palestinian President said he was rallying international opposition to Mr Trump's decision to recognise Jerusalem as Israel's capital, which he called an "unacceptable crime".
At a meeting with Jordan's king on Thursday, President Mahmoud Abbas said he rejects Mr Trump's decision and believes America has hurt its credibility in the region.
Mr Abbas said the Palestinians have been rallying Arab support as they formulate a response, and he had been communicating with other world leaders.
"Fortunately, there was a positive response from all the countries in the world, from Europe and from Africa and countries close to America that don't support the US," he said.
"These all are messages to Trump that what he did is an unacceptable crime."
Chancellor Angela Merkel said Germany would stand by UN resolutions on the Israel-Palestinian conflict.
"We're sticking to the relevant UN resolutions — they make clear that the status of Jerusalem needs to be negotiated as part of negotiations on a two-state solution for Israel and that's why we want this process to be revived," she said.