"Netanyahu has committed crimes against humanity the same like those terrorists who carried out the Paris massacre," he told reporters in televised comments.
His comments risk ratcheting up a new row in the increasingly tense relationship between the two countries after Turkish President Recep Tayyip Erdogan blasted Netanyahu for "daring" to attend the weekend's anti-terror solidarity march in Paris after the attacks.
Netanyahu spat back yesterday that Erdogan's "shameful remarks must be repudiated by the international community."
In 2010, Israeli commandos stormed the Turkish-flagged Mavi Marmara, the largest ship in an aid flotilla for the besieged Gaza Strip.
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Nine Turks died in the raid and one more died in hospital this year after four years in a coma. Meanwhile nearly 2,200 Palestinians, mostly civilians, were killed in Israel's offensive on Gaza earlier last year.
Davutoglu said Netanyahu was "the head of a government which massacred children playing in the beaches in Gaza and destroyed thousands of houses."
It had also "massacred our citizens by launching an operation against an aid ship in the international waters."
Turkey's relations with Israel -- once a key partnership for the Jewish state with a Muslim nation -- have have steadily deteriorated under Erdogan's rule.
The Turkish president is known for his angry outbursts at the Jewish state, declaring in July that Israel had "surpassed Hitler in barbarism".
In 2009, Erdogan walked off the stage at the World Economic Forum after an angry exchange with the the then Israeli president, Shimon Peres.