Ya'alon belittled the U.N. resolution granting the Palestinian Authority status as a non-member state.
"As far as I'm concerned, the Authority can call itself the Palestinian Empire," he said at a cultural event in the Sharon region.
Ya'alon, a former chief of staff of the Israeli military and member of the Likud Party, called the Israeli Peace Now movement a "virus" in 2009 and said illegal settlements on the West Bank are legitimate. In 2002, he compared the Palestinian independence movement to cancer.
Former Vice Prime Minister Tzipi Livni, a leader in the opposition Kadima Party, warned Israel must kickstart the peace process.
"The United Nations' decision was just the overture," she said.
"We are sitting on a volcano that is due to erupt in March, when the world will lay a diplomatic plan on the table," she said. "Either they will impose a plan on us, or we can initiate our own plan."
Abbas has said the authority will begin issuing government documents within two months as an independent state.