Earlier, the Israeli PM congratulated the Brazilian president-elect on his victory and invited him to visit Israel.
During his campaign, the right-winger imitated U.S. President Donald Trump's strategy and promised to join the handful of countries that have moved their embassies in Israel from Tel Aviv to Jerusalem.
"Israel is a sovereign state and we shall duly respect that", he said.
Netanyahu issued a statement saying: 'I congratulate my friend Brazilian President-Elect, Jair Bolsonaro, for his intention to move the Brazilian Embassy to Jerusalem, a historic, correct and exciting step!'
Guatemala and Paraguay also moved their embassies to Jerusalem after the United States transfer, though the latter announced in September it would return its embassy to Tel Aviv. The decision has been hailed by Israeli Premier Benjamin Netanyahu.
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However the ascendancy of Prince Mohammed bin Salman changed the equations and he ended up being a critic of the establishment. It also is pressing Saudi Arabia for information about who ordered Khashoggi's killing and the location of his remains.
While the Palestinians claim East Jerusalem - occupied by Israel in the 1967 Middle East war - as the capital of a future state.
But Palestinian official Hanan Ashrawi condemned Mr Bolsonaro's plans to move the embassy as "provocative" and "will only destabilise security and stability in the region".
For decades the global community maintained that the city's status should be negotiated between Israel and the Palestinians.
Guatemala and Paraguay followed the US example, but Paraguay cancelled the move after Mario Abdo Benitez was sworn in as president in August. Israel claims all of the city, including the eastern sector, calling it home to Jerusalem's most important religious sites and Israel's eternal capital. We agreed that Brazil and the United States will work closely together on Trade, Military and everything else!
Most countries maintain embassies in Tel Aviv, saying the final status of Jerusalem must be determined through negotiations.
Bolsonaro, 63, who won a run-off election on Sunday, has outraged many with his overtly misogynistic, homophobic and racist rhetoric.