Leaders in both Asian countries have joined a global chorus of voices condemning US President Donald Trump's move.
Several thousand protesters, some shouting anti-US slogans and burning an effigy of Trump, gathered in front of the American Embassy in the Malaysian capital Kuala Lumpur.
In Indonesia, hundreds of protesters mostly clad in white were arriving outside the US Embassy in Jakarta, capital of the world's biggest Muslim-majority country. Some wore checkered scarves and waved Palestinian flags, while others shouted "Allahu Akbar" (God is greatest).
"We have prepared personnel and patrols to secure the US Embassy. We are expecting between 500 and 1,000 demonstrators," said Jakarta police spokesman Argo Yuwono.
The US Embassy in Jakarta advised its citizens to avoid areas where there were demonstrations and said its consulate in Indonesia's second-biggest city Surabaya had suspended public services on Friday.
Indonesian President Joko Widodo on Thursday urged the United States to reconsider its decision and instructed his foreign minister to summon the US ambassador for an explanation.
In Malaysia, leaders from the ruling party United Malay National Organisation (UMNO) and the popular right wing Pan-Malaysian Islamic Party (PAS), both of which represent the majority ethnic Malay-Muslims, led the rally and representatives of the Palestinian Islamist group Hamas are expected to join.
Protests are also expected in South Asia. Pakistan's major Islamist party Jamaat-e-Islami has announced rallies in all major cities after Friday prayers.
President Trump said on Wednesday that the United States would move its embassy to Jerusalem in the coming years.
Protests have already broken out in the West Bank and the Gaza strip as the Islamist terror group Hamas urged Palestinians to launch a fresh uprising against Israel.