This recognition makes Israel the first country to officially acknowledge Somaliland since its declaration of independence.
Mr Netanyahu stated the move was “in the spirit of the Abraham Accords” and aims to tackle Iranian-sponsored Houthi terrorism in the Red Sea and Strait of Aden.
The decision puts pressure on UK Prime Minister Sir Keir Starmer and US President Donald Trump to also recognise Somaliland, which is seen as a strategic ally against regional threats.
Somaliland, a former British protectorate, has successfully held democratic elections and is viewed as a stable entity, contrasting with an unstable Somalia.