The inauguration was attended by Israel's Prime Minister Benjamin Netanyahu and Guatemalan President Jimmy Morales.
Guatemala will inaugurate its embassy in Jerusalem on Wednesday - with its President Jimmy Morales attending - hot on the heels of the U.S., while the government in Asuncion said Paraguay's embassy would switch to Jerusalem at the end of this month.
Guatemala inaugurated its new embassy in Jerusalem on Wednesday, two days after the USA opened its embassy in the disputed holy city, reported Xinhua news agency.
The move followed Washington's inauguration on Monday that drew worldwide condemnation and violent clashes at the Gaza border that saw Israeli forces kill 60 Palestinian protesters.
The US and Guatemalan moves break with decades of worldwide consensus.
"You are always among the first, always among the first.We remember our friends, and Guatemala is our friend - then and now", Netanyahu went on, recalling that Guatemala was the second nation, after the U.S., to recognize Israel in May 1948.
Guatemala is one of only seven countries that sided with the U.S. on the moving of its embassy to Jerusalem, a move that received global backlash.
Paraguay says it will also relocate its embassy.