"Hamas is a terrorist organization that calls for the destruction of Israel and the international community must not embrace it," he said.
Palestinian President Mahmoud Abbas said over the weekend that he formally will present the new government on Monday, a move meant to end a seven-year rift between his Fatah movement and Hamas.
The Palestinians have been divided between two governments since Hamas wrested control of the Gaza Strip from Abbas' forces in 2007, leaving the president in charge only of autonomous areas of the West Bank.
The rift is deeply unpopular among Palestinians, and presents a serious obstacle to establishing a Palestinian state. The Palestinians seek the West Bank and Gaza, along with Israeli-annexed east Jerusalem, for their state. Israel captured the three areas in the 1967 Mideast war.
Repeated attempts at reconciliation have failed in the past, and officials reported last-minute haggling on Sunday. Khalil al-Haya, a top Hamas official in Gaza, said a disagreement over the Palestinian ministry for prisoners held by Israel threatened to delay Monday's announcement.
But both Palestinian factions now have incentives to finally repair ties.
Hamas is in the midst of a major financial crisis due to a blockade imposed by Israel and Egypt, while Abbas is in need of an accomplishment following the collapse of peace talks with Israel in late April. Convinced that he cannot reach peace with Netanyahu, the Palestinian leader believes now is the time to get internal Palestinian affairs in order.
In order to rally international support, Abbas has pledged that the new government will consist solely of apolitical technocrats and will accept international demands to renounce violence and recognize Israel's right to exist. The government is to be headed by Abbas' current prime minister, Rami Hamdallah, a British-educated university president.
A statement from Hamdallah's office Sunday denounced Netanyahu's call, saying it was part of a campaign intended to "cement the occupation by all means."
Since the Palestinian factions announced their intentions to reconcile in late April, Netanyahu repeatedly has condemned the plan, saying that even tacit backing from Hamas would make it impossible to deal with the new government.
Israel and the West consider Hamas, which is sworn to Israel's destruction and has killed hundreds of Israelis in suicide bombings and other attacks, a terrorist group. Even after the unity deal, Hamas will keep control over a significant arsenal and thousands of fighters in Gaza.
Abbas said Israel has already threatened punitive measures in response. An Israeli official said that only that if Hamas backed the new government, the Israeli government would convene and "we will be taking decisions." He spoke on condition of anonymity pending a formal decision.
In the past, Israel has applied financial pressure by withholding tens of millions of dollars in tax revenues it collects on behalf of the Palestinians each month.
And during a short-lived Palestinian unity government in 2006 and 2007, the West withheld international aid to the Palestinians because of Hamas' participation.
But it is not clear whether the international community will back his tough stance this time around. The U.S. and European Union have signaled that they are willing to at least give the new Palestinian government a chance. The U.S. and European Union are the largest donors to the Palestinians, providing hundreds of millions of dollars in aid to Abbas' government each year.
Last month, the EU said it "looks forward to continuing its support" to the Palestinians if the new government commits to nonviolence and seeking peace with Israel.
The U.S. has said it will not make any decision until it sees the makeup of the government and sees its formal program.
If Abbas forms his new government, he will still face some tough questions.
In the short term, however, Netanyahu may have a tough time isolating Abbas.
Yoram Meital, chairman of the Chaim Herzog Center for Middle East Studies and Diplomacy at Ben Gurion University, said it was likely that the European Union and possibly the U.S. would recognize the new Palestinian government.
"The minute the world will recognize this government, that means not only unity between Hamas and Fatah, but also unity of the Palestinian land between the West Bank and Gaza," he said.
Nevertheless, he said the Hamas-backed government plays into Netanyahu's hands, giving him and his hard-line coalition an excuse to argue that there is no peace partner on the Palestinian side even at the expense of butting heads with world leaders.
"His political interests are very clear: To survive as prime minister, to maintain the current government, the current coalition, and he doesn't believe in any breakthroughs with the Palestinians," Meital said.
Associated Press writers Daniel Estrin in Jerusalem and Mohammed Daraghmeh in Ramallah, West Bank, contributed to this report.