Guatemala and neighbouring Honduras were two of only a handful of countries to join Israel and the United States, which has pledged to move its embassy to Jerusalem, in voting against the U.N. resolution.
Following the United States decision on Jerusalem, Palestinian president Mahmud Abbas said he would "no longer accept" any peace plan proposed by the USA, dealing a pre-emptive blow to a new initiative expected by Washington next year. "Wonderful news and true friendship!"
Israel called Guatemala's vote "courageous".
Guatemalan President Jimmy Morales said on his official Facebook account on Sunday that after talks with Prime Minister Benjamin Netanyahu, he chose to instruct his foreign ministry to move the embassy from Tel Aviv to Jerusalem.
"One of the most important topics was the return of the embassy of Guatemala to Jerusalem". The video showed Netanyahu speaking on Christmas eve from Jerusalem.
The two nations are, along with El Salvador, in what is known as the Northern Triangle of Central America.
More news: North Korea must cease 'threatening behaviour' before talks can begin, says Tillerson"God bless you, my friend, President Jimmy Morales, God bless both our countries, Israel and Guatemala", Netanyahu said, switching to English, in remarks to a weekly meeting of his Likud party faction in parliament.
Guatemala is home to about 1,000 Jews in a population of 15 million.
The Palestinian foreign ministry on Monday slammed as "shameful" Guatemala's decision to transfer its embassy to Jerusalem after the United States recognised the city as the capital of Israel.
The resolution passed by the General Assembly declared the U.S. action on Jerusalem "null and void". The 128-9 vote was a victory for Palestinians, but fell short of the total they had predicted. Thirty-five nations abstained from the vote.
As a sequel to that, the UN General Assembly voted to adopt a non-binding resolution on the status of Jerusalem. Many governments have long said that the fate of Jerusalem must be resolved through negotiations.
The move was hailed by Netanyahu and by leaders across much of the Israeli political spectrum. The holy city has been at the centre of peace-making efforts for decades.