An estimated 1,500 protesters set off from the Husseini mosque in downtown Amman holding up signs saying "Al-Aqsa is in danger".
"There is a greater danger today, and that is the Jewish state draft law," Hamzeh Mansur, the former head of the Brotherhood's Islamic Action Front party, told the protesters.
"Where is Jordan's custodianship over Jerusalem and where is the promised Palestinian state," he asked.
Jordan has custodianship over the Al-Aqsa mosque compound in Jerusalem -- which is holy to both Jews and Muslims -- and other Muslim holy sites in annexed Arab east Jerusalem, which the Palestinians want as the capital of their future state.
East Jerusalem has been hit by months of violence, which has spread across the occupied West Bank and to Arab communities inside Israel.
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The tensions soared earlier this month when Israeli police entered Al-Aqsa during clashes triggered by a vow by far-right Jewish groups to pray at the holy site, which they call Temple Mount.
Against that background, the Israeli government endorsed Sunday a proposal to enshrine in law the country's status as the national homeland of the Jewish people.
The Palestinian leadership has said the law "kills" the Middle East peace process and namely the creation of a Palestinian state side by side Israel.
Critics have also said the move will weaken democracy in Israel and could institutionalise discrimination against Israel's 1.7 million Arab citizens.
The Israeli parliament is to vote on the law on Wednesday.