AU Commission Chairman Moussa Faki Mahamat told assembled heads of state that the plan unveiled in late January represented the "umpteenth violation of multiple United Nations and African Union resolutions".
He said that it was prepared without international consultation and that it "trampled on the rights of the Palestinian people", a line that drew applause in the main hall at AU headquarters.
Trump's long-delayed peace proposals were immediately rejected by the Palestinians, who have boycotted his administration over its pro-Israel stance.
Trump’s peace plan
The proposals include giving Israel the green light to annex settlements in the occupied West Bank, the largest part of the territories the Palestinians see as their future state.
The outgoing AU chair, Egyptian President Abdel Fattah al-Sisi, said in his remarks Sunday that "the Palestinian cause will always be in the hearts and minds of the people of Africa".
His successor, South African President Cyril Ramaphosa, compared Trump's proposals to regulations in place during his country's apartheid period.
"As I listened to it and as I read everything that's written about it, it brought to mind the horrible history that we in South Africa have gone through," he said.
Palestinian President Mahmoud Abbas, who regularly attends AU summits, did not travel to Ethiopia this year.
Palestinian officials said last week that Abbas was heading to the UN to push for a Security Council resolution condemning Trump's peace proposals.
The resolution will almost certainly be vetoed by the US.
Abbas was represented on Sunday by Palestinian Prime Minister Mohammad Shtayyeh, who reiterated Palestinian leaders' position that the Trump plan "has no legitimacy whatsoever".
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