Trailing his centre-left opponent Isaac Herzog in opinion polls, Mr Netanyahu said on Monday he would not permit a Palestinian state to be created under his watch if he is re-elected.
The three-term leader has sought to shift the focus away from socio-economic issues and on to security challenges, saying he alone can defend Israel.
He previously hinted he would accept a Palestinian state, but has reversed course, citing risks that he linked to the regional spread of Islamist militancy.
“Whoever moves to establish a Palestinian state or intends to withdraw from territory is simply yielding territory for radical Islamic terrorist attacks against Israel,” he told the Israeli news site NRG.
“This is the genuine reality that was created here in the past few years. Those who who do not understand that bury their heads in the sand.”
His remarks appeared aimed at rallying right-wing support, a day before Israel`s election.
Mr Herzog, leader of Israel’s Labour party, favours reviving peace talks with US-backed Palestinian President Mahmoud Abbas.
Mr Herzog’s centrist running mate, Tzipi Livni, was formerly a member of Netanyahu’s conservative coalition government and handled negotiations with Abbas until they stalled last April.
She and Mr Herzog have accused Mr Netanyahu of playing up fears over the Palestinians, and Iran’s nuclear programme, to distract from the high cost-of-living and other social issues that surveys suggest are Israelis’ principal concerns.