"I appeal to all the citizens of Israel and ask you: Please exercise restraint in your actions and words. Our hearts ache, our blood boils, but we must remember that we are, first and foremost, human beings and we are citizens of a law-abiding country," Netanyahu said.
"We are making decisions in a responsible, cool-headed and considered manner," he said.
His remarks came following the death of a young Palestinian boy in a suspected "revenge" attack by right-wing extremists as Israel moved troops to its border with Gaza.
Khdeiron's body was found in the Jerusalem forest on Wednesday. The premier also vowed to bring to justice those responsible for the murder.
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"I unequivocally condemn the murder of a Palestinian youth in Jerusalem a few days ago," he said.
"The police investigation is ongoing. We don't know yet the motives or the identities of the perpetrators but we will. We will bring to justice the criminals responsible for this despicable crime, whoever they may be," he said.
The secret to the special US-Israel relationship can be summarised in four words - "shared values, common interests," he said.