Pence, noting the president's message of appreciation for Israel's "stalwart commitment to freedom", said that "the events of this day have been deeply humbling to me", referring again to "Jerusalem, the capital of the State of Israel".
Arab lawmakers in Israel will boycott Vice President Mike Pence's speech to the Israeli parliament in Jerusalem on Monday, citing the US decision to recognize the contested city as the capital of Israel.
Pence is the first senior United States official to visit the contested city since President Donald Trump sparked Palestinian protests and global condemnation by declaring it Israel's capital and announcing the embassy move.
A brief fracas erupted just before he addressed the Knesset as Israeli Arab lawmakers, holding signs declaring Jerusalem the capital of Palestine, left the chamber in protest.
He described the Pence visit as a mission "to rebuild trust and confidence" in getting to a two-state solution, in which a state of Palestine would be established in the West Bank, Gaza Strip and east Jerusalem, lands Israel captured in 1967.
"The United States has chosen fact over fiction", Pence said during a speech Monday addressing Israel's Knesset, or parliament.
The embassy move has so incensed the Palestinians that they say the US can no longer be a fair arbiter of any peace process with the Israelis.
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Before arriving to Israel, Pence paid a surprise visit to an American military base at the border between Jordan and Syria.
Ayman Odeh, the leader of the Joint List, said: "Our protest today in the plenum is in honour of all who oppose the occupation and dream of peace". Observers had previously expected the Embassy to open in a few years.
Pence used his speech to call on the Palestinians to come back to the negotiating table, reiterating that the USA will support a two-state solution if both sides agreed to it.
Abbas broke off relations with the U.S. over the embassy move, saying that any peace deal would require Israel's recognition of east Jerusalem as the capital of a future Palestinian state.
They accused the United States of siding with Israel and said Washington can no longer serve as a mediator.
Mr Pence urged the Palestinians to return to the negotiating table, saying: "Peace can only come through dialogue".
He also said that he and Egyptian President Abdel Fattah el-Sisi had disagreed on the embassy move. The tour was supposed to be made last month, but it was suspended by Trump's Jerusalem decision.