Any move by the United States to recognise Jerusalem as Israel's capital would fuel extremism and violence, Arab League Secretary-General Ahmed Aboul Gheit said on Saturday.
Israel captured Arab East Jerusalem in the 1967 Middle East war.
"Jerusalem has been the Jewish capital for 3,000 years and the capital of Israel for 70 years, whether [Turkish President] Erdoğan recognizes it as such or not", Haaretz reported, quoting a senior Israeli official. "The days of the sultan and the Ottoman Empire have passed".
Erdogan also warned that if the U.S. does so, Turkey could cut off diplomatic ties with Israel. "The US embassy and the embassies of the rest of the world should be housed in Jerusalem".
"Such a step will disrupt the peace process in the Middle East and cause new tensions and conflicts in the region".
Jerusalem remains at the core of the Palestinian-Israeli conflict, with Palestinians hoping that East Jerusalem - now occupied by Israel - might eventually serve as the capital of a future Palestinian state.
Erdogan's equation of wealth-smuggling and treason, first made Sunday, builds on his allegations of an global conspiracy against his government, more than a year after a coup attempt. Jerusalem is our capital, and the time has come for the world to recognize this.
On Sunday, US President Donald Trump's adviser and son-in-law Jared Kushner said the president had not yet made a decision on whether to formally recognise Jerusalem as Israel's capital, a move that would break with decades of US policy.
German Foreign Minister Sigmar Gabriel said that the only solution to the issue of Jerusalem would be through "direct negotiations" between the Israelis and Palestinians.
"If you take this kind of step, we will convene an Islamic cooperation summit in Istanbul", he added.
Jordan's King Abdullah is due to meet with Erdogan in Turkey on Wednesday, as part of a diplomatic push to stall any decision by Trump - which possibly could be made this week - that would affect the status quo.