"I want to congratulate Canadian Prime Minister Stephen Harper on the moral, courageous step he took," The Jerusalem Post quoted Netanyahu saying during the weekly cabinet meeting in Jerusalem.
Calling Iran "the most significant threat to global peace," Ottawa Friday gave Iranian diplomats five days to leave the country, The Post said.
Canadian Foreign Affairs Minister John Baird advised all Canadians to refrain from traveling to Iran and said his country's diplomatic staff had already left the Islamic Republic, CNN said.
Canada's decision sends a "principled message to the world that it is forbidden for the dark regime in Iran to get nuclear weapons, " Netanyahu said.
President Shimon Peres issued a statement Saturday night praising Canada's decision.
"I thank my colleague Governor-- Gen. David Johnston, Prime Minister Stephen Harper and the whole nation of Canada for taking a stance based on the highest morals and hope that other nations will see Canada as a moral role model," the statement said. "The diplomatic isolation of Iran is an important step for the security and stability of the entire world."