Dubbing such a move as 'red line' for Muslims, the Turkish President told the parliament his country's response "could go as far as us cutting diplomatic ties with Israel," reported the Independent.
Reports had emerged that US President Donald Trump was considering recognising Jerusalem as Israel's capital, a move that would be represented by the relocation of the US embassy from Tel Aviv to Jerusalem.
The plan has drawn criticism from a number of world leaders who fear it would further escalate regional tensions.
No country currently has its embassy in Jerusalem, according to the reports.
Israel captured east Jerusalem, which is home to major Muslim, Christian and Jewish holy sites, in the 1967 Middle East war.
It quickly annexed it, declaring the whole of the city as its capital in a move which has not been recognised internationally.
The Palestinians seek it as a future capital. (ANI)