"Should such a step be taken, it would have catastrophic consequences," Husam Zomlot told Reuters in an interview.
"That would be actually the kiss of death to the two-state solution because Jerusalem is at the very heart of the two-state solution," Zomlot said.
A senior administration official told Reuters last week that US President Donald Trump would likely make the announcement on Wednesday, although his adviser and son-in-law, Jared Kushner, said the president had not yet made a final decision.
Such a declaration would break with decades of US policy and could fuel violence in the Middle East.
Trump delays Jerusalem verdict as pressure mounts
Past US presidents have insisted that the status of Jerusalem - home to sites holy to the Jewish, Muslim and Christian religions - must be decided in negotiations between the two sides.
"Should the two-state solution receive that final lethal blow, then the main reaction from us will be strategic and political because we are not going to be engaged in an empty process," Zomlot said.
Israeli officials have made clear they would welcome US endorsement of their claim of sovereignty over all of Jerusalem. There was no immediate comment from the Israeli government to Zomlot's comments.
Israel captured Arab East Jerusalem in the 1967 Middle East war. It later annexed it, declaring the whole of the city as its capital - a move not recognized internationally. Palestinians want East Jerusalem as the capital of their future state.
Kushner is leading Trump's efforts to restart long-stalled Israeli-Palestinian peace talks, efforts that so far have shown little progress.
Ghost village perched in Jerusalem's hills may soon vanish
Zomlot warned the role of the United States as a mediator in the conflict would be effectively torpedoed if Trump declared Jerusalem the capital of Israel.
"It will be a self-inflicted disqualification of the US from the role of the mediator ... (which) will be irreversible because by then the US would be part of the problem, not part of the solution," he said.
Trump suggested earlier this year he was open to new ways to achieve Middle East peace that did not necessarily entail the creation of a Palestinian state, a hallmark of US policy for decades.
Jordan begins diplomatic offensive ahead of Trump move on Jerusalem
Trump is again expected to delay moving the US embassy to Jerusalem from Tel Aviv, US officials said on Friday, speaking on condition of anonymity.
Saudi Arabia's ambassador to Washington, Prince Khalid bin Salman, said on Monday that any US announcement on the status of Jerusalem before a final settlement of the Israeli-Palestinian conflict would harm the peace process and increase regional tensions.
Jordan, the Arab League and Turkey have also warned against the dangers of such a move.
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