"There is no choice but to form a broad unity government", Netanyahu said in a video statement. "I said, we'll see what happens".
In a sign of the demanding negotiations to come, sources in Netanyahu's office told AFP he was cancelling a planned trip next week to the UN General Assembly in NY due to the "political context" in Israel.
With Israeli media reporting more than 95 percent of votes counted in Tuesday's election, a Likud-led right-wing, religious bloc looked poised to control 55 of parliament's 120 seats, with 56 going to a center-left alliance. Netanyahu's conservative Likud stood at 31 seats.
However Mr Gantz could have an even more complex job to form a government, because of differences between left-wing parties.
With about 60% of votes counted, the party of incumbent Benjamin Netanyahu is neck and neck with that of his centre-left main challenger.
The Joint List has even offered to join in a Blue and White-led coalition government, but Gantz has rejected this.
"The picture changes completely for the Palestinians now because Trump is unlikely to announce his plan without Netanyahu and a strong right-wing government in place", said Halabi.
Hundreds of chairs for party supporters remained empty as activists were kept outside the hall and leaders digested the numbers.
"Netanyahu's defeat came after his election campaign focused on carrying out more violations, especially the annexation of the Jordan Valley and the northern Dead Sea", Aloul said.
"During the elections, I called for the establishment of a right-wing government".
The document was signed by Netanyahu; United Torah Judaism leader Yaakov Litzman; and Yamina MKs Ayelet Shaked, Naftali Bennett, Rafi Peretz and Bezalel Smotrich.
But with the election's apparent kingmaker, Avigdor Lieberman, insisting on a secular government between the two, and Blue and White refusing to sit in such a coalition with Netanyahu still heading Likud, it was unclear what the way forward may be.
"That is to form a broad, liberal, national unity government" with Yisrael Beitenu, Blue and White and Likud.
The election was Israel's second in five months, and President Reuven Rivlin, who must appoint someone to form the next government, has stressed the "need to avoid a third".
The prime minister expressed readiness to form a new coalition framework including opposition parties. He said, "In the next few days, we will begin negotiations to form a strong, Zionist government and in order to avert a risky, anti-Zionist government", a reference to the Blue and White, which he denounces for being ready to work with the MPs from the Arab Joint List. "In case of failure, a new round of elections will be conducted". Rivlin promised he will do everything in his power to prevent a third vote. It's generally assumed that, at the latest, an indictment against Netanyahu will also bring about his political end.
For Netanyahu, of course, this is also personal as he faces three corruption charges on which pre-trial hearings are about to commence soon. The prime minister has been seeking to win majority support for legislation granting him immunity. Will Netanyahu lose his office this time? He spearheaded the recent adoption of the "Nation-State Law", which enshrines Jewish supremacy as the legal foundation of the Israeli state.
During the campaign, Netanyahu cast himself as a seasoned statesman who was the only candidate able to steer Israel through a sea of challenges.
Gantz had additionally already reached out to Ayman Odeh, chief of the Joint Listing, the conglomeration of 4 Arab events that scored effectively in Tuesday's election, securing 12 seats.
After such a caustic race, there is little public appetite for another bruising campaign.
Following Netanyahu's message, at a memorial for the anniversary of the death of ex-president Shimon Peres that both attended, the two men shook hands.