Mr Netanyahu likened Europe’s approach to Iran’s recent breaches of a 2015 deal limiting its nuclear programme to the appeasement of Nazi Germany.
He spoke after EU foreign ministers said the breaches were not significant.
Iran says they are a response to reinstated US sanctions, but insists it is not trying to build nuclear weapons.
It has threatened to return to the situation before the nuclear deal was agreed unless Europe does more to mitigate the effects of the sanctions. They have caused its oil exports to collapse and its economy to plunge into recession.
The EU has set up a mechanism for facilitating legitimate trade without direct financial transactions. However, Iran has said it does not meet its needs.
The global nuclear watchdog, the International Atomic Energy Agency (IAEA), confirmed last week that Iran was not complying with another key commitment on uranium enrichment.
Inspectors verified that the country had begun enriching uranium to 4.5% concentration – above the 3.67% limit set by the nuclear deal.
They also verified that Iran’s stockpile of low-enriched uranium had continued to grow since a 300kg (660lb) cap was exceeded on 1 July.
Low-enriched uranium, which has a 3-5% concentration, can be used to produce fuel for nuclear power plants. Weapons-grade uranium is 90% enriched or more.
Experts say the breach of the stockpile limit does not pose a near-term proliferation risk, but that enriching uranium to a higher concentration will begin to shorten Iran’s so-called “break-out time” – the time required for it to produce enough fissile material for a bomb.
On Monday, the foreign ministers of EU member states met in Brussels to discuss Iran’s actions and efforts to prevent the nuclear deal from collapsing.
Afterwards, EU foreign policy chief Federica Mogherini said the ministers did not see the breaches as being very serious, and that they would not yet be triggering a dispute mechanism – Article 36 of the nuclear deal – that could lead to the “snap back” of international sanctions against Iran
“None of the parties to the agreement have signalled their intention to invoke this article, which means that none of them is – for the moment, for the time being, with the data we had in particular from the IAEA – considering the non-compliance a ‘significant’ non-compliance.”
“We have also noticed that all the steps that have been taken by Iran are technically reversible.”
The stance infuriated Mr Netanyahu, who released a video statement saying it “reminds me of the European appeasement of the 1930s”.
“Also then, there was someone who buried his head in the sand and didn’t see the approaching danger,” the Israeli prime minister added. “It seems that there are those in Europe who won’t wake up until Iranian nuclear missiles fall on European soil, and then, of course, it will be too late.
“In any case, we will continue to do everything necessary to prevent Iran from obtaining nuclear weapons.”
Mr Netanyahu, who was a staunch opponent of the nuclear deal, has accused Iran of lying about not pursuing nuclear weapons and of continuing to pursue nuclear weapons knowledge since 2015. Iran has called the allegations “ridiculous”.
The US ambassador to the EU said it was “time to act” against Iran, not only over its nuclear breaches but also its “malign activities” throughout the world.
President Donald Trump said he unilaterally withdrew the US from the nuclear deal in May 2018 because it did not go far enough to restrict Iran’s nuclear programme.
He wants to replace it with one that would also curb Iran’s ballistic missile programme and its involvement in regional conflicts. But Iran has so far refused.
Tensions between Iran and the West have escalated in recent months, with the US blaming Iran for attacks on oil tankers in the Gulf of Oman, Iran shooting down a US surveillance drone over the Strait of Hormuz, and the UK seizing an Iranian oil tanker off Gibraltar that was suspected of breaching EU sanctions on Syria.