"Romney's declarations are harmful to American interests in our region, and they harm peace, security and stability," Palestinian negotiator Saeb Erakat told AFP.
"Even if this statement is within the US election campaign, it is unacceptable and we completely reject it. The US election campaign should never be at the expense of the Palestinians," he said.
"Romney is rewarding occupation, settlement and extremism in the region with such declarations."
At a speech in Jerusalem, Romney on Sunday hailed Jerusalem as Israel's capital, in an apparent endorsement of a position held by the Jewish state but never accepted by the international community.