"In the face of developments that arouse sensitivity over the status of Jerusalem, Mr President is calling a leaders' summit of the Organisation of Islamic Cooperation (OIC) in order to display joint action among Islamic countries," presidential spokesman Ibrahim Kalin told reporters in Ankara.
He said the summit meeting would take place on December 13. There was no immediate confirmation from Muslim leaders if they would come.
Turkey currently holds the chairmanship of the OIC.
The recognition of Jerusalem as Israel's capital and the moving of the US embassy from Tel Aviv to Jerusalem is a "grave mistake" against international agreements, Kalin warned.
"Jerusalem is our honour, Jerusalem is our common cause, Jerusalem is our red line," he added, urging the Trump administration to "return from this grave mistake immediately".
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The recognition will "throw the region and the world into a fire and it's not known when it will end", Bozdag, also government spokesman, wrote on Twitter.
Bozdag said such a step which showed "great intolerance and mindlessness" would "destroy the peace process".
'Chaos and instability'
Turkish Foreign Minister Mevlut Cavusoglu told reporters in Brussels ahead of meeting US counterpart Rex Tillerson that the move is a "mistake" that "will not bring stability and peace but rather chaos and instability."
Asked whether he would bring the issue up with Tillerson, the minister said: "I have already told him and I will tell him again."
Erdogan had warned Tuesday that the status of Jerusalem is a "red line" for Muslims and could even prompt Turkey to cut ties with Israel.
The Turkish leader – who regards himself as a champion of the Palestinian cause – is due to hold talks later in Ankara with Jordanian King Abdullah II who is also a strong opponent of the move.
Last year, Turkey and Israel ended a rift triggered by Israel's deadly storming in 2010 of a Gaza-bound ship that left 10 Turkish activists dead and led to a downgrading of diplomatic ties.
The two sides have since stepped up cooperation in particular in energy but Erdogan is still often bitterly critical of Israeli policy.
The United States supports a strong relationship between Turkey, the key Muslim member of NATO, and Israel, which is Washington's main ally in the Middle East.