A spokesman for Palestinian president Mahmud Abbas said the veto was "unacceptable and threatens the stability of the international community because it disrespects it".
The 14 other countries on the Security Council voted in favour, but US Ambassador Nikki Haley exercised the American veto.
Nabil Abu Rudeina told AFP in Arabic that the support for the resolution, which included US allies France, Italy and Japan, "showed the (American) isolation. The international community must work now to protect the Palestinian people."
Israeli Prime Minister Benjamin Netanyahu immediately thanked Haley for her stance.

Nikki Haley moves to veto the UN resolution on Jerusalem (AFP)
Nikki Haley, while vetoing the UN resolution, said it was an "insult". "It won't be forgotten" she added.
Trump's December 6 announcement that he would recognise Jerusalem as Israel's capital and move the American embassy there from Tel Aviv has faced heavy international criticism.
Palestinians see the east part of the city as the capital of their future state.