By Agence France-Presse
The clashes, which left more than 2,400 Palestinians wounded, erupted before a White House delegation and Israeli officials opened the embassy at an inauguration ceremony in Jerusalem and continued throughout the day.
It was the bloodiest day in the Israeli-Palestinian conflict since a 2014 Gaza war.
The dead included eight children under the age of 16, according to the Palestinian envoy to the United Nations. The Gazan health ministry provided the overall death and injury toll.
Tens of thousands had gathered near the border in protest while smaller numbers of stone-throwing Palestinians approached the fence and sought to break through, with Israeli snipers positioned on the other side.
The embassy inauguration nonetheless went on as planned, attended by a Washington delegation that included US President Donald Trump's daughter Ivanka and her husband Jared Kushner, both White House aides.
Ivanka Trump helped declare the new embassy open and a plaque and seal were unveiled before the 800 guests at the ceremony.
Trump addressed the ceremony by video.
"Our greatest hope is for peace," he said despite the Palestinian anger the move has provoked.
"The United States remains fully committed to facilitating a lasting peace agreement."
Israeli Prime Minister Benjamin Netanyahu told Trump in his address that "by recognising history you have made history".
Protests and clashes
Along the Gaza border, crowds built throughout the day in the Palestinian enclave less than 100 kilometres (60 miles) away from Jerusalem and sealed off from Israel by a blockade.
Israel's military said 40,000 Palestinians had taken part in the protests and clashes.
The military also said one of its fighter jets had struck five targets at a Hamas training facility in Gaza.
Earlier, a warplane and tank targeted two other Hamas posts in response to what it said was fire toward its forces by Hamas.
Palestinian president Mahmud Abbas accused Israel of "massacres," while Amnesty International called the violence an "abhorrent violation" of human rights. Human Rights Watch denounced a "bloodbath".
Kuwait requested an emergency meeting of the UN Security Council for Tuesday and condemned the bloodshed.
EU foreign policy chief Federica Mogherini said "we expect all to act with utmost restraint to avoid further loss of life," while British Prime Minister Theresa May's spokesman urged "calm and restraint".
French President Emmanuel Macron condemned the violence, emphasising that "Palestinians have the right to peace and security" and reiterating his commitment to a two-state solution.
The surge in fatalities led South Africa to recall its ambassador in Israel "with immediate effect until further notice".
Turkish President Recep Tayyip Erdogan meanwhile accused Israel of "state terror" and "genocide", announcing three days of mourning and a giant protest in Istanbul on Friday. Turkey also said it was recalling its ambassadors to the US and Israel "for consultations".
Netanyahu defended the use of force, saying "every country has the obligation to defend its borders".
Israeli military spokesman Jonathan Conricus alleged "we have seen three different squads, fully equipped terrorist squads with weapons, trying to plant IEDs at the (border) fence in three different locations."
The inauguration followed Trump's December 6 recognition of the disputed city as Israel's capital.
The ceremony took place at what until now had been a US consulate building in Jerusalem.
Abbas said the new embassy was tantamount to "a new American settler outpost" in Jerusalem and that the United States "is no longer a mediator in the Middle East".
Around 1,000 police officers were positioned around the embassy, while Israel's army said it almost doubled the number of troops surrounding Gaza and in the occupied West Bank.
Israeli Defence Minister Avigdor Lieberman said in a message to Gazans "we will protect our civilians with all our means and not enable the fence to be crossed."
Israel occupied the West Bank and east Jerusalem in 1967 and later annexed east Jerusalem in a move never recognised by the international community.
Beyond the disputed nature of Jerusalem, the date of the embassy move was also key.
May 14 marks the 70th anniversary of the founding of Israel.
'Off the table'
On Tuesday, Palestinians mark the "Nakba", or catastrophe, commemorating the more than 700,000 Palestinians who fled or were expelled from their homes in the 1948 war surrounding Israel's creation.
Palestinian protests are also planned for Tuesday.
There had already been weeks of protests and clashes along the Gaza border, with 109 Palestinians killed by Israeli fire there since March 30.
No Israelis have been killed and the military has faced criticism over the use of live fire.
Israel says it only opens fire when necessary to stop infiltrations, attacks and damage to the border fence, while accusing Hamas, the Islamist movement that runs the blockaded Gaza Strip, of seeking to use the protests as cover to carry out violence.
Jerusalem's status is perhaps the thorniest issue in the Israeli-Palestinian conflict.
Israel considers the entire city its capital, while the Palestinians see east Jerusalem as the capital of their future state.
In the decades since 1967, international consensus has been that the city's status must be negotiated between the two sides, but Trump broke with that to global outrage.
He has argued that it helps make peace possible by taking Jerusalem "off the table", but many have pointed out he has not announced any concessions in return from Israel.