Iraqi cleric Muqtada al-Sadr warned that he would form a special militia to liberate Jerusalem in case the US administration moved its embassy in Israel from Tel Aviv to the holy city, asserting that it would be a declaration of war on Islam.
"Transferring the US embassy to Jerusalem would be a public and more explicit than ever declaration of war against Islam," he said in a statement.
US President Donald Trump has pledged to recognize Jerusalem as Israel's capital and relocate the US embassy there from Tel Aviv, stirring the Islamic leaders around the world, including Shiiti cleric al-Sadr, whose powerful Mahdi Army militia once fought US occupation forces in Iraq.
Sadr said the Cairo-based Arab League as well as the Organization of Islamic Cooperation, the world's main pan-Islamic body, should take a decisive stand on the issue or dissolve themselves.
He also called "for the immediate closure of the US embassy in Iraq" if Washington implemented its promised embassy transfer in Israel.
The Mahdi Army has been reorganized as the Peace Companies and now fights in the system of militias known as the Hashd al-Shaabi, or Popular Mobilization Units. 
The US provides military backing for the Iraqi offensive to retake large parts of the country seized by the Islamic State group.
The final status of Jerusalem is one of the thorniest issues in resolving the Israeli-Palestinian conflict. 
Israel considers Jerusalem - including the eastern Palestinian sector it annexed in 1980 - as its indivisible capital. The Palestinians want to make east Jerusalem the capital of their future state.
The White House on Sunday appeared to play down suggestions that a move was imminent, with press secretary Sean Spicer saying: "We are at the very beginning stages of even discussing this subject."