"These will only make a peace agreement more distant," he said of the applications the Palestinians made on Tuesday to adhere to 15 treaties.
"Any unilateral moves they take will be answered by unilateral moves at our end."
Netanyahu's remarks, made at the beginning of the weekly cabinet meeting, came as Israeli and Palestinian negotiators prepared to meet with US envoy Martin Indyk, in a last-ditch attempt to save teetering peace talks from collapse.
Palestinian president Mahmud Abbas rejected a plea from Kerry to withdraw the treaty applications, while Netanyahu ignored US appeals to refrain from tit-for-tat moves, asking for a range of options to be drawn up for retaliation.
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