Guatemalan President, Jimmy Morales and Israeli Prime Minister, Benjamin Netanyahu attended the embassy opening in an office complex in west Jerusalem.
Palestine has recalled four of its ambassadors from the European Union because the ambassadors participated at the inauguration of the US Embassy in Jerusalem, said the Palestinian Foreign Ministry in Ramallah.
Netanyahu said that this move goes "hand in hand" with opening two days ago of the USA embassy in the capital.
And Al Jazeera reports Paraguay plans to move its embassy to Jerusalem by the end of May.
The Palestinians said they consider the participation a "grave violation of global law". "We remember our friends and Guatemala is our friend, then and now".
He said that peace-loving nations should support the two-state solution agreed upon by the worldwide community, which requires the establishment of a Palestinian state on the 1967 borders with East Jerusalem as its capital. The United States opened its Jerusalem embassy in the southern Jerusalem's Arnona neighborhood on Monday.
While Jean-Yves Le Drian, France's Minister of Europe and Foreign Affairs, said the decision to move the embassies to Jerusalem "violated global law and in particular UN Security Council resolutions".
They culminated in the killing of almost 60 Palestinians by Israeli forces in clashes along the border.
Guatemala is one of only a handful of nations that supported U.S. President Donald Trump's decision in December to recognize Jerusalem as Israel's capital.
Since the Hamas-led protests began on March 30, more than 110 Palestinians have been killed and some 2,500 have been wounded by live fire, according to the Palestinian health ministry.