Around 1,500 gathered outside the well-protected compound close to the Bosphorus and the area was sealed off by police barricades.
The slogan "free Palestine" was daubed on a consulate wall while protesters hurled plastic bottles into the compound. A piece of paper with a representation of an Israeli flag was also burned.
They chanted slogans including "murderer US, get out of the Middle East", "down with America!" and urged Palestinian Islamist group Hamas to "strike Israel".
"Jerusalem is for Muslims and will remain forever," the organisers said in a statement. Protesters also lit flares and waved Palestinian flags.
However the protest passed off largely peacefully and demonstrators dispersed.
A similar protest took place outside the US embassy in the capital Ankara, with people holding images of President Recep Tayyip Erdogan.
Ahead of Trump's widely-flagged announcement Erdogan had warned after a meeting with Jordanian King Abdullah II that the move would "play into the hands" of terror groups.
Erdogan has called a summit of the Organisation of Islamic Cooperation (OIC) in Istanbul on December 13 to discuss the issue.
Last year, Turkey and Israel ended a rift caused by Israel's deadly storming in 2010 of a Gaza-bound ship that left 10 Turkish activists dead and led to a downgrading of diplomatic ties.
The two sides have since stepped up cooperation, in particular in energy, but Erdogan, who regards himself as a champion of the Palestinian cause, is still often bitterly critical of Israeli policy.
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