Turkey and the USA are also opposed to the vote, with Ankara saying regional stability depended on Iraq's unity and territorial integrity.
Safeen Dizayee, a spokesman for the Kurdish regional government in Iraq, did not respond directly to Netanyahu's comments, but appeared to welcome them.
"The [Kurdish region] should be aware that there will most certainly be a price to pay for insisting on its approach for a referendum despite all our friendly recommendations", the statement said, without elaborating.
The ministry said it welcomed the decision made by the Iraqi parliament, adding that its vote was a "clear indicator of importance attached to Iraq's political unity and territorial integrity".
He warned the move would push Iraqi Kurdistan into "bigger isolation".
He said Iran and Turkey believe that if the referendum is held, it would be a basis for more tensions and conflicts in Iraq.
Ownership of Kirkuk has always been disputed between Iraq and the Kurdish authorities.
Last spring, Kirkuk's governorate voted to raise the Kurdish flag over state buildings, despite Baghdad's insistence that only Iraq's national flag should fly in the multi-ethnic city.
Turkey has a substantial Kurdish minority which is sometimes estimated as making up around a quarter of its total population of just under 80 million.
Kurds had pushed for a state of their own since the conclusion of World War I when Kurdish-populated areas were split between modern-day Iraq, Iran, Turkey and Syria as boundaries across the Middle East were redrawn.
Ankara is also deeply troubled by aspirations of some Kurds in Syria for an autonomous region on its border and considers the Syrian Kurdish Kurdish Peoples' Protection Units (YPG) to be a terror group.
Thursday's decision to remove Najm Eddine Karim followed parliamentarians' rejection of Kurdish plans to hold an independence referendum on Tuesday.