"We are waiting to see if (the move) happens. If it does it will not help peace and we hope it does not happen," Abbas told reporters minutes after discussing the Middle East situation with Pope Francis.
The Palestinians strongly oppose the move, saying it would kill any hopes for negotiating peace and rile the region by undercutting Muslim and Christian claims to the holy city.
During the meeting, Abbas presented Francis with gifts recalling Christianity's birthplace in the Holy Land, including a stone from the Church of the Holy Sepulcher in Jerusalem and documentation about the ongoing restoration of the Church of the Nativity in Bethlehem.
A recent UNESCO decision has ignored all Jewish connection to the city, calling all Jewish claims to the city into question at an international legal level.
As he was leaving the pope's study, Abbas said the opening of the new embassy to the Vatican was "a sign that the pope loves the people of Palestine and loves peace."
In a statement, the Vatican called for a resumption of direct negotiations between Israelis and Palestinians "to bring an end to the violence that causes unacceptable suffering to civilian populations, and to find a just and lasting solution."
It called for a climate that could lead to "courageous decisions".
The Vatican has long sought an internationally guaranteed status for Jerusalem that safeguards its sacred character.
In its communique after the Abbas meeting, the Holy See didn't refer to Jerusalem by name but said that during the talks: "Emphasis was placed on the importance of safeguarding the sanctity of the holy places for believers of all three of the Abrahamic religions.
After the papal meeting, Abbas formally inaugurated the new Palestinian embassy across the street from one of the main gates of Vatican City: He pulled back a curtain revealing a plaque and extended the Palestinian flag from a flagpole outside a window.
The embassy, located in the same building as the embassies of Peru, Ecuador and Burkina Faso, is a fruit of recent accords in which the Vatican formally recognized the "State of Palestine."
In his comments to reporters, Abbas said he hoped other countries would follow the Vatican's example and recognize the Palestinian state.
Abbas had initially accepted an invitation to be in Paris on Sunday, but French officials say that visit has been postponed.