The plan by American Muslims to build a mosque and Islamic centre in New York near where the World Trade Centre towers once stood has been attracting outrage for several months from conservative groups and some of the families of victims of the terror attacks.
But speaking at an event in Washington, the 82-year-old Holocaust survivor and human rights campaigner said: "Let's turn it around - let's do it together.
“Jews, Christians, and Muslims together will create this place… sponsored together, financed together.”
He said such it would be a sign of religious solidarity.
Mr Wiesel added: "It can become a very great symbol here - a great monument for humanity."
He said that while he thought the mosque’s instigator, Imam Faisal Rauf, had good intentions, building it so near to the site of the World Trade Centre would "hurt some people who have suffered."
His proposal was backed by White House senior adviser David David Axelrod, who said: "That sounds like a wonderful idea. It gives me hope."
The construction of the “Cordoba Initiative” has the support of New York Mayor Michael Bloomberg and prominent Jewish lawyer Alan Dershowitz.
But other Jewish voices, including the Anti-Defamation League’s national director Abraham Foxman, and Judea Pearl, the father of the journalist murdered in Pakistan by terrorists, have appealed for it to be built elsewhere.