Israeli gunfire killed at least 43 Palestinians, the highest toll in a single day since a series of protests demanding the right to return to ancestral homes in Israel began on March 30.
It was the highest Palestinian single-day death toll since a series of protests dubbed the "Great March of Return" began at the border with Israel on March 30 and since a 2014 Gaza war.
The health officials said 900 Palestinians were wounded, about 450 of them by live bullets, the Palestinian Journalists Syndicate saying eight journalists were among them.
Tens of thousands gathered at the frontier on Monday, some of them approaching Israel s border fence - a line Israeli leaders vowed Palestinians would not be allowed to breach.
The Israeli army said that more than 35,000 people were involved in the protests and clashes.
Black smoke from tyres set alight by demonstrators rose in the air.
"Today is the big day when we will cross the fence and tell Israel and the world we will not accept being occupied forever," said Gaza science teacher Ali, who declined to give his last name.
"Many may get martyred today, so many, but the world will hear our message. Occupation must end," he said.
Later in the day, Israeli leaders and a US delegation including Treasury Secretary Steven Mnuchin and President Donald Trump s daughter and son-in-law, Ivanka Trump and Jared Kushner, were due to attend the opening of the embassy relocated from Tel Aviv to Jerusalem.
The embassy was to be inaugurated at 4:00 pm (1300 GMT).
"A great day for Israel," the US president, who stoked Arab anger by recognising Jerusalem as Israel s capital in December, said in a tweet.
Prime Minister Benjamin Netanyahu, in lockstep with Trump over fulfilling a long-standing US promise to move the embassy to the holy city and over the president s withdrawal from the Iran nuclear deal last week, echoed the sentiment.
"What a moving day for the people of Israel and the State of Israel," Netanyahu wrote on Twitter.
The 43 Palestinian dead on Monday included a 14-year-old boy, a medic and a man in a wheelchair who had been pictured on social media using a slingshot.
A Palestinian Health Ministry spokesman said the dead also included six children under the age of 18.
The Israeli military identified three of those killed as armed militants whom it said tried to place explosives near the fence in the southern Gaza Strip.
The latest casualties raised the Palestinian death toll to 86 since the protests started six weeks ago. No Israeli casualties have been reported.
"The IDF (Israel Defence Forces) will act forcefully against any terrorist activity and will operate to prevent attacks against Israelis," the military said in a statement.
The killings have drawn international criticism, but the United States has echoed Israel in accusing Gaza s ruling Hamas movement of instigating violence, an allegation it denies.
Jason Greenblatt, Trump s Middle East peace envoy, said on Twitter that "taking the long-overdue step of moving our Embassy is not a departure from our strong commitment to facilitate a lasting peace deal. Rather, it is a necessary condition for it."
In excerpts seen by Reuters of a speech he planned to deliver at the embassy inauguration ceremony, Kushner said it is possible for both sides in the Israeli-Palestinian conflict "to gain move than they give" in any peace deal.
"Jerusalem must remain a city that brings people of all faiths together," Kushner, the US envoy to the Middle East, will say at the opening.
The Trump administration has nearly completed a long-awaited Israeli-Palestinian peace plan but is still undecided on how and when to roll it out, given Palestinians outrage over the embassy move and their contention that Washington can no longer be an honest broker.
But Palestinian Prime Minister Rami Hamdallah accused the United States of "blatant violations of international law".
The Palestinians, who want their own future state with its capital in East Jerusalem, have been outraged by Trump s shift from previous administrations preference for keeping the US Embassy in Tel Aviv pending progress in peace efforts.
Those talks have been frozen since 2014. Other international powers worry that the US move could also inflame Palestinian unrest in the occupied West Bank, which Israel captured along with East Jerusalem in the 1967 Middle East war.
The protests are scheduled to culminate on Tuesday, the day Palestinians mourn as the "Nakba" or "Catastrophe" when, in 1948, hundreds of thousands of them were driven out of their homes or fled the fighting around Israel s creation.
"Choosing a tragic day in Palestinian history (to open the Jerusalem embassy) shows great insensibility and disrespect for the core principles of the peace process," Hamdallah wrote.
Most countries say the status of Jerusalem - a sacred city to Jews, Muslims and Christians - should be determined in a final peace settlement and that moving their embassies now would prejudge any such deal.
But Guatemala, which received support from Israel in its counter-insurgency campaigns in the 1980s, plans to open an embassy in Jerusalem on Wednesday.
Its ambassador visited the new site, in an office building in the western part of the city, on Monday. Paraguay is to follow suit later this month.
In London, the British government said it had no plans to move its Israel embassy from Tel Aviv to Jerusalem, and said it disagreed with the US decision to do so.
The Russian government said it feared the embassy move would increase tensions across the Middle East.