Government spokesman Mohammad al-Momani told state news agency Petra that the announcement by U.S. President Donald Trump violated long-standing U.N. Security Council resolutions that "stipulated the non-recognition of the Israeli occupation" of the city's eastern sector and the adjacent West Bank.
The staunch U.S. ally considered "all unilateral moves that seek to create new facts on the ground as null and void", the spokesman added.
Foreign Minister Ayman Safadi said later in a tweet that the move "frustrated" peace efforts. "Jordan rejects the decision and all its implications and will continue to work for an independent Palestinian state with East Al-Quds as its capital," Safadi added.
The king's Hashemite dynasty is the custodian of the Muslim holy sites in Al-Quds, making Jordan sensitive to any changes in the status of the city.
A government source said Palestinian President Mahmoud Abbas was due to hold talks with the monarch on Thursday in a stepped-up diplomatic offensive to counter Trump's plan.
Several protests broke out in areas of Jordan's capital, Amman, inhabited by Palestinian refugees in response to Trump's announcement.
Many people in Jordan are descendants of Palestinian refugees whose families left after the creation of Israel in 1948.