The Tánaiste Simon Coveney says cutting diplomatic ties with Israel would not be helpful for Palestinians or Israelis.
At least 58 people were shot dead during violence on Monday after the US moved its embassy to Jerusalem.
Mr Coveney summoned the Israeli Ambassador to a meeting yesterday to express his outrage but stopped short of expelling him.
Minister Coveney said: "To send an Israeli Ambassador home and therefore have no contact point with the Israeli government, and to bring our own ambassador home from Tel Aviv, and therefore shut off all communications with a country that we want to work with in terms of finding a peaceful way forward in the Middle East, I think it would be totally counter-productive."