"We will make Likud's life hell in the opposition", Yair Lapid, number two in the centrist party led by former military chief Benny Gantz, said in a televised statement, referring to Netanyahu's right-wing party.
With 97.4% of the vote counted, Netanyahu's Likud and the rival Blue and White were deadlocked with a projected 35 seats apiece in the 120-seat parliament.
Despite that, Netanyahu gained four seats compared to his outgoing coalition government, according to a spreadsheet published by the Central Elections Committee of parties that garnered enough votes to enter the next parliament.
Gantz told Blue and White activists that they should be proud of their achievements, which he called "unprecedented".
In showcasing his close ties with Mr Trump during the race, Mr Netanyahu sought to tap into the president's popularity among Israelis, who delighted in his recognition of Jerusalem as Israel's capital in 2017 and the subsequent transfer of the U.S. embassy there from Tel Aviv.
Gantz called Netanyahu's pledge "irresponsible".
In fact, the outcome of Israel's elections essentially confirms what we knew.
One exit poll showed a possible tie between the right- and left-wing blocs, meaning that Gantz had an opportunity to replace Netanyahu as prime minister. He was deeply disturbed by Trump's supposed role in Netanyahu's re-election, citing recent policy decisions such as moving the USA embassy to Jerusalem, and declaring Israeli sovereignty over the Golan Heights. If it includes Israeli concessions to the Palestinians, Netanyahu's probable far-right coalition allies will likely object.
Though the Palestinian issue was rarely mentioned in the raucous campaign, Netanyahu had in the final stretch pledged for the first time to annex parts of the occupied West Bank in a desperate bid to rally his right-wing base.
Pompeo did say that President Donald Trump's peace envoys Jared Kushner and Jason Greenblatt are about to reveal their proposal "to resolve a problem that's been going on for decades and decades that previous administrations couldn't solve", and that the administration is "hopeful that we have some ideas that are different, unique, which will allow the Israelis and the Palestinian people to come to a resolution of the conflict". In December, when these elections were called, 73% of voters said they wanted a right or centre-right government.
He faced a tough challenge from Gantz, who offered the security credentials prized by Israelis and a clean-hands image, but lacked the political experience the prime minister accrued in a combined 13 years in office. If it includes Israeli concessions to the Palestinians, Netanyahu's probable far-right coalition allies will probably object.
Palestinians seek a state of their own in the West Bank and Gaza Strip, with East Jerusalem as its capital.
Before polls opened, Palestinian President Mahmoud Abbas said that he hoped the election would bring change and peace to the region.
In another sign of Israel's current feeling of strength, PM Netanyahu insisted last week that he would refuse removal of any Jewish settlements built inside occupied Palestinian land as part of any peace plan.