After 15 months of war, Trump said Gaza had become a "demolition site", adding he had spoken to Jordan's King Abdullah II about moving Palestinians out of the territory.
"I'd like Egypt to take people. And I'd like Jordan to take people," Trump told reporters.
Jordanian Foreign Minister Ayman Safadi said that "our rejection of the displacement of Palestinians is firm and will not change. Jordan is for Jordanians and Palestine is for Palestinians."
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Egypt rejects Trump proposal
“We reject the displacement of Palestinians or encouraging their transfer outside their land, whether temporarily or long-term,” the Egyptian foreign ministry said in a statement, responding to the Trump statement.
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Egypt has previously warned against any "forced displacement" of Palestinians from Gaza into the Sinai desert, which Sisi said could jeopardise the peace treaty Egypt signed with Israel in 1979.
Bassem Naim, a member of Hamas's political bureau, told AFP that Palestinians would "foil such projects", as they have done to similar plans "for displacement and alternative homelands over the decades".
Islamic Jihad, which has fought alongside Hamas in Gaza, called Trump's idea "deplorable" and said it encouraged "war crimes and crimes against humanity by forcing our people to leave their land".
President Abbas "expressed strong rejection and condemnation of any projects" aimed at displacing Palestinians from Gaza, a statement from his office said.
Hostage to be freed before next swap
Two Palestinian sources said that an Israeli woman held hostage in Gaza, and whose release Israel has demanded before allowing the return of displaced Palestinians, will be handed over within days. The sources said she was expected to be released following an intervention by mediators Egypt and Qatar. "Arbel Yehud is expected to be freed by Friday in exchange for 30 Palestinian prisoners serving life sentences."