Israel's foreign ministry also denounced the UN Human Rights Council, which commissioned the inquiry, as biased and called the process that led to the report "politically motivated and morally flawed".
"Israel defends itself against a terror organisation which calls for its destruction and that itself carries out war crimes," Netanyahu said in a statement, referring to the Islamist movement Hamas which rules the Gaza Strip.
Hamas welcomed what it said was the report's condemnation of Israel, while a senior official from the Palestine Liberation Organisation in the occupied West Bank said the inquiry reinforced its will to pursue a case against the Jewish state at the International Criminal Court.
Israel had long prepared for the publication of the report, aiming to defend its actions in last summer's conflict in the face of heavy criticism over the deaths of children and other civilians.
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The conflict killed about 2,200 Palestinians, most of them civilians, and 73 people on the Israeli side, mostly soldiers.
Earlier this month, as part of its efforts to preempt the UN report, Israel released a 242-page document in which it defended its conduct as both "lawful" and "legitimate".
The UN report was to have been published during the council's main annual session in March, but the investigators obtained a delay after the head of the team quit under Israeli pressure.
Canadian international law expert William Schabas resigned as chair of the commission after Israel charged that he was biased because he had prepared a legal opinion for the PLO in October 2012.
New York judge Mary McGowan Davis replaced Schabas as chair and oversaw the release of the findings on Monday.
The report said the Commission of Inquiry had gathered "credible allegations" that both sides had committed war crimes.
It also decried the "indiscriminate" firing of thousands of rockets and mortar rounds at Israel, whose aim was to "spread terror" among Israeli civilians.
Davis noticeably choked up while referring to the number of children killed during the seven-week conflict, an AFP correspondent said, with the UN giving a figure of 551.
The commission was not granted entry to Israel or the conflict area, and relied instead on more than 280 confidential interviews and some 500 written submissions for its findings.
"This report was commissioned by a notoriously biased institution," it said of the UN Human Rights Council.
"Israel will consider the report in light of these essential failings. It would encourage all fair-minded observers to do the same.