Speaking to his Cabinet, Netanyahu said the world had become a "more dangerous place" as a result of the deal. He reiterated a long-standing threat to use military action against Iran if needed, declaring that Israel "has the right and the duty to defend itself by itself."
Sunday's agreement is just the first stage of what is hoped to bring about a final deal ensuring that Iran does not develop a nuclear weapon.
Under the deal, Iran will curb many of its nuclear activities for six months in exchange for limited and gradual relief from painful economic sanctions. The six-month period will give diplomats time to negotiate a more sweeping agreement.
The package includes freezing Iran's ability to enrich uranium at a maximum 5 percent level, which is well below the threshold for weapons-grade material and is aimed at easing Western concerns that Tehran could one day seek nuclear arms. International monitors will oversee Iran's compliance.
For Iran, keeping the enrichment program active was a critical goal. Iran's leaders view the country's ability to make nuclear fuel as a source of national pride and an essential part of nuclear self-sufficiency.
But Israel views any enrichment as unacceptable, saying making low-level enriched uranium weapons grade is relatively simple. It demands all enrichment be halted, and that Iran's abilities to produce uranium be rolled back.
Netanyahu had also called for economic sanctions to be increased. Israel fears that Iran will use the diplomatic process as cover to trick the international community, much the way North Korea did in its march toward a nuclear bomb.
"Today the world became a much more dangerous place," Netanyahu said.
Israeli officials acknowledged they would have to turn their focus toward affecting the outcome of the final negotiations. Israel is not part of the Geneva talks but remains in close touch with the U.S. and other participants.
Israel feels especially threatened by Iran, given Tehran's repeated references to destroying Israel, its support for hostile militant groups on Israel's borders and its development of long-range missiles.
Israeli President Shimon Peres, a Nobel Peace laureate, expressed cautious optimism that Sunday's deal could change the region.
"I would like to say to the Iranian people: You are not our enemies and we are not yours. There is a possibility to solve this issue diplomatically. It is in your hands. Reject terrorism. Stop the nuclear program. Stop the development of long-range missiles," he said.
Another Nobel peace laureate, Mohammed ElBaradei, Egypt's pro-democracy leader and former director of the United Nations nuclear watchdog agency, welcomed the deal.
In a tweet on his official account, he wrote: "After decade of failed policies, world better off w/ Iran deal. Equity, trust building, respect & dialogue R key to any conflict resolution."