At talks with Mahmoud Abbas, he spoke of being gratified that the Palestinian leader had committed to taking necessary steps to “fight terrorism”.
Israel and the Palestinians have not held peace talks for three years and Mr Trump acknowledges it would be “one of the toughest deals of all” to broker.
This is the last day of the US president’s visit to the Middle East.
In both Gaza and the occupied West Bank, Palestinians have held protests against the trip and in support of a hunger strike by Palestinian prisoners in Israeli jails.
He flew to Tel Aviv direct from Saudi Arabia, where at a summit on Sunday he urged Arab and Muslim leaders to work together to “drive out” Islamist extremists.
Mr Trump said he had come to Bethlehem, where the meeting with Mr Abbas was held on Tuesday morning, “in a spirit of hope”.
“I am committed to trying to achieve a peace agreement between the Israelis and the Palestinians,” he said. “And I intend to do everything I can to help them achieve that goal.
Mr Trump also said that he was “gratified” that Mr Abbas had attended the summit in Riyadh and “committed to taking firm but necessary steps to fight terrorism and confront its hateful ideology”.
“Peace can never take root in an environment where violence is tolerated, funded and even rewarded,” he added, apparently referring to payments made by the PA to the families of Palestinian prisoners and those killed in the conflict with Israel.
Mr Abbas welcomed Mr Trump’s “noble and possible mission”.
“I would like to reiterate our commitment to co-operate with you in order to make peace and forge an historic peace deal with the Israelis,” he said.
“So many young, beautiful, innocent people living and enjoying their lives murdered by evil losers in life,” he said.
Later on Tuesday Mr Trump returned to Jerusalem. He visited the Yad Vashem Holocaust memorial and is due to make a speech at the Israel Museum.