After a bitterly fought campaign that exposed deep splits within Israeli society and a damaging rift with Washington, Netanyahu knuckled down to the task of building a coalition likely to be dominated by right-wing and religious parties.
By mid-morning, disputes were already emerging, an indicator of likely problems in piecing together an operational government.
The coalition will have to hit the ground running in order to shore up shattered ties with the administration of US President Barack Obama and address divisions at home.
And pressure against West Bank settlement resurfaced, with outgoing UN Middle East envoy Robert Serry calling for the new government to "freeze" it in order to restore trust.
"Illegal settlement activity cannot be reconciled with the objective of a negotiated two-state solution and may kill the very possibility of reaching peace", said Serry, who is stepping down after seven years.
As Netanyahu formally accepted Wednesday the task of building a government, he pledged Israel would hold out a "hand of peace" to the Palestinians and make sure to patch up US ties, while continuing to fight the Iran deal.
Netanyahu himself was at the centre of most of the controversy after he ruled out the establishment of a Palestinian state if reelected, pledged to build more settler homes in annexed east Jerusalem and played the race card at the expense of Israel's Arab minority.
