Trump outlined the 80-page plan at the White House along with visiting Israeli Prime Minister Benjamin Netanyahu, saying that it proposes a "realistic" two-state solution.
Trump said the new plan recognizes Jerusalem as Israel's "undivided capital," while claiming that the Palestinians' capital will include areas of East Jerusalem.
The Trump administration has postponed several times the publication of its "Deal of the Century" for peace between the Israelis and the Palestinians, a proposal that had been criticized repeatedly by the Palestinians who had little engagement in it.
The Palestinian Authority said earlier on Tuesday that the new US Middle East peace plan aims to establish an isolated Palestinian entity in the Gaza Strip.
Also on Tuesday, thousands of Palestinians demonstrated in Gaza against the plan.
In the plan, Trump also promised to double Palestinian-controlled territory and proposed a four-year freeze of Israeli development in the area expected to be part of a Palestinian state.
Washington's role as an Israeli-Palestinian conflict mediator has been questioned following the Trump administration's pro-Israeli policies in the past three years including recognizing Jerusalem as Israel's capital and moving the US Embassy there, and slashing hundreds of millions of US dollars in humanitarian aid to the Palestinians.
Experts pointed out that the announcement of the plan came at a time when Trump needs a distraction from the impeachment proceedings and Netanyahu is struggling with corruption charges.
