Kerry, pushing back on Israel's fury at the US abstention of the United Nations vote, questioned Prime Minister Benjamin Netanyahu's true commitment to Palestinian statehood, which has formed the basis for all serious peace talks for years.
Though Netanyahu says he believes in the two-state solution, Kerry said, he's at the helm of the most right-wing (government) in Israel's history.
Kerry's speech marked the latest escalation in a vicious, drama-filled row between the US and Israel that has erupted in the last days of Obama's administration.
The extraordinary display of discord between allies with US and Israeli officials openly disparaging each other has also pitted President Barack Obama against President-elect Donald Trump, who has firmly taken Netanyahu's side.
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Israel's government was enraged after the US abstained from voting on the UN Security Council resolution last week that called Israeli settlements in the West Bank and east Jerusalem a violation of international law.
"The United States did in fact vote in accordance with our values, just as previous administrations have done," Kerry said in a farewell speech at the State Department. "The vote in the United Nations was about preserving the two-state solution. That's what we were standing up for."
Kerry reiterated that the Obama administration's commitment to Israel was as strong as that of previous presidents, but he also noted that previous US administrations had also abstained on certain resolutions critical of Israel.
"No American administration has done more for Israel's security than Barack Obama's," Kerry said.
Obama, who is vacationing with his family in Hawaii, hasn't commented publicly on the resolution or the resulting spat.
Seeking to show he wasn't focusing exclusively on Israel's failings, Kerry in the same sentence bemoaned Israel's "seemingly endless occupation" of Palestinian land and Palestinian leaders' "incitement" of violence. He invoked the widespread concern that the growing Arab population will eventually make Jews a minority in Israel, creating a democratic crisis for Israel unless there's a separate Palestinian state.
While Trump has not outlined a vision, he has signaled a much more sympathetic approach toward Israel, appointing an ambassador with strong ties to the West Bank settler movement and promising to move the US Embassy from Tel Aviv to Jerusalem over Palestinian and others' objections.
"President-elect Trump, thank you for your warm friendship and your clear-cut support for Israel," Netanyahu said on Twitter before Kerry's speech.
The international community overwhelmingly opposes Israeli settlement construction in the West Bank and east Jerusalem, territories captured by Israel in 1967 and claimed by the Palestinians for an independent state.
The Palestinians, and most of the world, see settlements, now home to 600,000 Israelis, as an obstacle to peace.