Mr Gantz, a popular politician and longtime political rival of Mr Netanyahu, joined the Israeli Prime Minister’s coalition and the War Cabinet in the aftermath of Hamas’ attack on October 7.
“If you choose the path of fanatics and lead the entire nation to the abyss – we will be forced to quit the government,” he said on Saturday night.
However, the departure of Mr Gantz could leave Mr Netanyahu more reliant on far-right allies who have taken a hard line on negotiations over a ceasefire and hostage release, and who believe Israel should occupy Gaza and rebuild Jewish settlements there.
It comes just days after Yoav Gallant, the Israeli defence minister and the third member of the War Cabinet, issued a rare rebuke of Mr Netanyahu, whom he accused of dithering over the future of post-war Gaza.
Mr Netanyahu faces mounting pressure on multiple fronts, with hardliners in his government backing a military offensive in Rafah, southern Gaza, while the US and other key allies have warned against action in the city’s densely populated areas.
The Israeli Prime Minister appeared to reject the ultimatum on Saturday night.
According to Haaretz, the Israeli Prime Minister called Mr Gantz’s conditions “euphemisms with a clear meaning: the end of the war, defeat for Israel, and the abandonment of most of the hostages – leaving Hamas intact and establishing a Palestinian state”.