The Israeli Prime Minister made the claim while detailing allegations that Hamas was siphoning off funding from humanitarian groups in the Gaza Strip.
“I'm going to say something now that some of you will not believe. But I'm going to say it anyway because it's true,” Mr Netanyahu said in a video released on Thursday.
“I, the Prime Minister of Israel, care more about Palestinians than their own leaders do.
"Israel cares more about Palestinians than their own leaders do.”
Following the arrest of two aid workers from World Vision and the United Nations, he said stolen funds had been used for terrorist activities.
“Innocent and impoverished Palestinians were denied vital aid supplied from nations around the world,” Mr Netanyahu added.
“Hamas stole critical support for Palestinian children so that they could kill our children…I express my deepest sympathy with innocent Palestinians and those well-meaning nations who generously donated money to help them.”
His speech drew particular ire for saying that Israel facilitates humanitarian aid in Gaza and treats wounded Palestinians, with opponents citing the country’s decade-long blockade of the territory and recent shootings at protests and clashes.
Shawan Jabarin, director general of the Al-Haq Palestinian rights group, told Al-Jazeera that Mr Netanyahu was aiming to discredit international groups operating in the enclave and consolidate Israel’s control of financial aid.
“They are trying to undermine the work of international aid organisations,” he said.
Al-Haq’s representative to the Hague, Nada Kiswanson, has recently reported death threats over her submissions to the International Criminal Court’s inquiry into the 2014 Gaza war.
Mr Netanyahu’s statement came after Israeli authorities announced the arrest of a UN Development Programme worker and World Vision manager in Gaza for allegedly using their positions to aid Hamas.
Both agencies said they would investigate the allegations and called for the men to receive a fair trial.
World Vision, whose Gaza manager Mohammad el-Halabi stands accused of funnelling millions of pounds to Hamas, has temporarily suspended operations in the area but cast doubt on the allegations.
A spokesperson said Mr el-Halabi was accused of stealing $50 million (£38 million) but had only handled the budget since October 2014.
“Based on the information available to us at this time, we have no reason to believe that the allegations are true,” he added.
“It is tragic that this issue is taking us away from our work on important issues of injustice and poverty affecting billions of children around the world.”
Hamas has also denied receiving funds or help from aid workers, saying the cases were a fabrication and threatening “serious consequences”.
“These (allegations) are par for the course of an Israeli plot to restrict the work of international relief agencies operating in Gaza in order to tighten the Gaza blockade,” Hamas spokesman Sami Abu Zuhri said.
Israel has imposed movement restrictions on the Strip since the early 1990s, intensifying the measures in 2007 after the Islamist group Hamas seized control.
A land, air and sea blockade has been in place ever since, driving unemployment, food insecurity and dependency on aid according to the UN.
The 2014 conflict between Israel and Hamas killed more than 2,200 Palestinians, including 500 children, the majority of them civilians.
Hamas is an Islamist group that controls the Gaza Strip and is part of unity government with the Fatah party in the Palestinian Authority.
Its military wing, the Izzedine al-Qassam Brigades, is designated a terrorist group by the UK, US and EU but the organisation in its entirety is not proscribed by the British Government.
Tensions in Israel and the West Bank have been hitting boiling point in recent months, with a string of attacks by Palestinians sparking a security crackdown that has sparked concerns over the excessive use of force and “collective punishment”.
Palestinian stabbings, shootings, bombings and car rammings have killed 34 Israelis and two Americans since September, while more than 200 Palestinians have been killed in the same period.
Israeli authorities said the majority were carrying out or attempting attacks but others were shot dead at protests and clashes, and an Israel Defence Forces (IDF) soldier is currently on trial for shooting a disarmed Palestinian man in the head as he lay injured on the ground.