Donald Trump congratulated Israelis as the United States officially moved its embassy from Tel Aviv to Jerusalem on Monday.
In a video messages shown to guests attending a ceremony outside the building, the US President said: "Congratulations. It's been a long time coming.
"Today Jerusalem is the seat of Israel's government, it is the home of the Israeli legislature and the Israeli Supreme Court, and Israel's prime minister and president.
"Israel is a sovereign nation with the right, like any other sovereign nation, to determine its own capital. Yet for many years we failed to acknowledge the obvious."
The move – which is timed to coincide with Israeli independence day – follows his announcement last December that the United States now recognises Jerusalem as Israel’s capital.
"As I said in December, our greatest hope is for peace," he said.
"The United States remains fully committed to facilitating a lasting peace agrement and we continue to support the status quo at Jerusalem's holy sites including at the Temple Mount, also known as Haram al-Sharif.
"This city and this entire nation is a testament to the unbreakable spirit of the Jewish people. The United States will always be a great friend of Israel and a partner in the cause of freedom and peace."
Mr Trump sent his daughter Ivanka and husband Jared Kushner to represent the US at the ceremony.
Israeli President Reuven Rivlin and Prime Minister Benjamin Netanyahu were also present.
In his own remarks, Mr Netanyahu thanked Mr Trump for showing the "courage" to keep a key campaign promise.
"The truth is that Jerusalem has been and always will be the capital of the Jewish people, the capital of the Jewish state," he said.
The decision to relocate led to widespread criticism from other Western countries, including Britain, and sparked Palestinian violence in Gaza and the West Bank.
More than 60 have died in protests known as the Great March of Return that have been held since the end of March.
At least 25 Palestinians were shot dead by Israeli troops on Monday alone as protesters attempted to scale Gaza’s border fence with Israel.