Jamie McGoldrick, the UN humanitarian co-ordinator for Yemen, condemned “the horrific attack”.
The rebel Houthi-run government said a Saudi-led coalition was responsible – a claim Saudi Arabia denied.
The US said it had launched an “immediate review” of its already reduced support for the coalition.
“US security co-operation with Saudi Arabia is not a blank check,” White House National Security Council spokesman Ned Price said.
He said Washington was “prepared to adjust our support so as to better align with US principles, values and interests, including achieving an immediate and durable end to Yemen’s tragic conflict”.
The Saudi-led coalition is backing the internationally-recognised government of Yemen.
Thousands of civilians have been killed since the war began in 2014.
Mr McGoldrick said aid workers who arrived at the scene had been “shocked and outraged” by Saturday’s air strikes.
He also called for an immediate investigation.
The attack targeted the funeral of the father of Houthi-appointed Interior Minister Galal al-Rawishan, an ally of the rebels and of former President Ali Abdullah Saleh.
One rescuer, Murad Tawfiq, described the scene as a “lake of blood”, the Associated Press news agency reports.
Graphic photos circulating on social media show charred and mutilated bodies.
The International Committee of the Red Cross (ICRC) said it had prepared 300 body bags.
The ICRC’s Rima Kamal told the BBC “several air strikes” had hit the venue where hundreds of civilians had been present.
The damage to the buildings was extensive.
A number of Houthi rebel military and security officials are believed to have been killed in the strike.
BBC correspondents say their presence could explain why the funeral was targeted, though it is likely many civilians were also there.
The Saudi-led coalition denied carrying out the strikes, suggesting “other causes”.
The government of President Abdrabbuh Mansour Hadi is fighting both the Houthis and forces loyal to Mr Saleh.
Thousand of civilians have been killed since the Saudi-led air campaign started last March, the UN’s rights body says.
Nearly three million people have been displaced in Yemen, one of the region’s poorest countries, since the war began in 2014.
The Houthis took the capital then, forcing Mr Hadi’s government to flee. Some ministers have since returned to the city of Aden.