The US President issued the warning, saying that Palestinians must pursue peace with Israel
US President Donald Trump has threatened to withhold US aid to the Palestinians if they don't pursue peace with Israel.
He was speaking after talks with Israeli Prime Minister Benjamin Netanyahu on Thursday at the World Economic Forum in Davos, Switzerland.
Trump said the Palestinians had snubbed the US by not meeting Mike Pence on his trip to the Middle East.
"When they disrespected us a week ago by not allowing our great vice president to see them, and we give them hundreds of millions of dollars in aid and support, tremendous numbers, numbers that nobody understands -- that money is on the table and that money is not going to them unless they sit down and negotiate peace," Trump said.
Palestinians shunned Pence's visit this month after Trump recognised Jerusalem as Israel's capital and vowed to move the US embassy to the city, whose status is at the heart of the Israeli-Palestinian conflict.
Trump's endorsement in December of Israel's claim to Jerusalem as its capital drew universal condemnation from Arab leaders and criticism around the world. It also broke with decades of US policy that the city's status must be decided in negotiations between Israel and the Palestinians.
A spokesman for Palestinian President Mahmoud Abbas said the United States had taken itself "off the table" as a peace mediator since it recognised Jerusalem as Israel’s capital.
Palestinian chief negotiator Saeb Erekat said: "The insistence of President Trump, saying that Jerusalem is off the negotiating table, translates into that peace is off the negotiating table. This is very disrespectful to the international community, very disrespectul to international law. This is just rewarding the Israeli aggression and occupation."
Israel's government regards Jerusalem as the eternal and indivisible capital of the country, although that is not recognised internationally.
The EU this month assured Abbas that it supports his ambition to have East Jerusalem as the capital of a future Palestinian state, in the bloc’s latest rejection of Trump’s decision to recognise Jerusalem as Israel’s capital.
Washington had already said it would withhold about half the initial aid it planned to give a UN agency that serves the Palestinians.
And at the United Nations on Thursday, the US Ambassador to the UN, Nikki Haley, also criticised the Palestinians, describing a recent speech by Abbas as indulging "in outrageous and discredited conspiracy theories".