Speaking to a German television station, Netanyahu asserted that "recognition of the Jewish state is a necessary condition for peace," Israeli broadcaster Arutz Sheva reported Monday.
He expressed support for mediation by U.S. Secretary of State John Kerry in talks between the two sides, saying it was "the only way to achieve peace."
The prime minister added, "I'm ready to accept their existence in their country, why don't they accept me?"
Netanyahu denied construction of Jewish settlements was also preventing an agreement, saying the issue "will be solved in the talks' framework."
Hamas lawmakers said Sunday that recognition of Israel would be a "death sentence" for the Palestinian Authority.
Palestinian Mahmoud Abbas has previously said Arab states would never recognize Israel, although a spokesman for the Palestinian Liberation Organization said last week Abbas was ready to recognized the Jewish state.
Dan Shapiro, the U.S. ambassador to Israel, said Friday the PA would be required to recognize Israel's right of existence in any agreement.