JERUSALEM — In what appeared to be a case of unfortunate timing, Israel officially inaugurated a rebuilt synagogue in Jerusalem’s Old City on Monday, entangling what was intended to be a festive cultural event with the diplomatic row over new Israeli construction in the contested territory.

The restoration of the Hurva Synagogue, which was destroyed by Jordanian forces during the 1948 war, has been under way for years. But its reopening ceremony coincided with a crisis in Israel-American relations over plans for new Jewish housing in East Jerusalem that were announced during a visit here last week by Vice President Joseph R. Biden Jr.

Like the rest of the Old City, the synagogue is located in territory that Israel conquered from Jordan in the 1967 war. Israel later annexed part of that territory, East Jerusalem, and claims sovereignty over all of Jerusalem, a claim that is not recognized by most of the world.

The Palestinians demand East Jerusalem as the capital of a future state, though the Jewish Quarter, where the synagogue stands, is likely to remain under some form of Israeli control.

The synagogue’s new white dome blends in with the city’s ancient monuments holy to Christians, Muslims and Jews. Because of the topography, seen from certain points around the city, it rises above the Islamic shrines of the compound revered by Muslims as the Noble Sanctuary, and by Jews as the Temple Mount, including Al Aksa Mosque.

In Damascus, Khaled Meshal, the exiled leader of the Islamic militant group Hamas, said the synagogue’s dedication signified “the destruction of the Al Aksa Mosque and the building of the temple,” according to Agence France-Presse.

The State Department said the United States was “deeply disturbed by statements made by several Palestinian officials mischaracterizing the event in question,” which could heighten tensions. “We call upon Palestinian officials to put an end to such incitement,” said P. J. Crowley, the State Department spokesman.

Stone-throwing Palestinian youths have clashed with Israeli forces in and around the Old City in the past few weeks. Palestinian agitators who said they feared provocations by Jewish extremists called on Muslims to flock to the Old City on Monday to defend Al Aksa Mosque.

Since Thursday, Israeli authorities have prevented Palestinians from entering Jerusalem from the West Bank in an effort, they said, to avoid confrontation.

Dimitri Diliani, a Jerusalem representative of Fatah, the mainstream Palestinian movement, said that Palestinian anger was not directed against the synagogue “in its religious context, but rather as a natural expression of protest against cumulative violations carried out by the state of Israel as an illegal occupier of East Jerusalem.”

The Hurva Synagogue, Hebrew for “ruin,” was originally built in the 1860s on a site where smaller synagogues had been erected and destroyed over the centuries, Jewish tradition says. It remained in ruins after Jordan destroyed it and expelled the Jewish community from the Old City in 1948.

Jewish residents returned to the Jewish Quarter after the Israeli conquest in 1967, but Israel did not decide what to do with the synagogue until 2002.

The restoration hewed closely to the original design, with the architects working mostly off black and white photographs, old texts and souvenirs.

As final preparations were made for the ceremony on Monday, Gura Berger, spokeswoman for the Company for the Reconstruction and Development of the Jewish Quarter, the government body that oversaw the restoration, was trying to divorce the dedication from politics.

The Hurva is not the national religious symbol it once was, she said. Today, she said, it stands for “continuity” and “repair.”