Valls said the shock vote proved that many citizens of the European Union had deep doubts about the bloc.
"They don't understand what it does, they cannot see what it brings them. To them, Europe is invasive on minor issues, and absent on the essential," he told the French National Assembly.
"Worse, they feel it imposes its choices and systematically acts against their interests. The pro-Brexit slogan 'take back the power' says things very clearly. And we cannot ignore it."
"The alternative is simple: either we do as we have always done, avoiding the evidence and trying to plug the gaps ... Or we finally pluck up the courage to go all out, turn this shock into an electroshock and an opportunity."
Valls said it would be a mistake to think that the referendum concerned only the British, saying the future of the entire bloc that is at stake.
"I refuse to see this great project veer off course. I refuse to see it founder and sink, pulled under by the growing weight of populism. I refuse to see us cede to fatalism, pessimism," said Valls, who was born in Spain and became a French citizen aged 20.
Far-right leader Marine Le Pen, who has won over many voters in recent years with her anti-immigration, eurosceptic views, has already called for a "Frexit" referendum.
Valls also said he was opposed to a "punitive Europe following ultra-liberal ideas and budgetary austerity. Europe cannot only be states reporting on the management of their budgets," he said.
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