Addressing the U.N. General Assembly, Netanyahu appeared to pull back from any threat of an imminent Israeli attack on Iranian nuclear facilities, saying the Islamic Republic would be on the brink of producing an atomic weapon only next summer.
He added that he was confident the United States and Israel, which have disagreed about the urgency of military action, could devise a common strategy to prevent Iran from developing a nuclear weapon.
Holding up a cartoon-like drawing of a bomb with a fuse, Netanyahu literally drew a red line just below a label reading "final stage" to a bomb, in which it was 90 percent along the path of having sufficient weapons-grade material.
"A red line should be drawn right here, before Iran completes the second stage of nuclear enrichment necessary to make a bomb, before Iran gets to a point where it is a few months or a few weeks away from amassing enough enriched uranium to make a nuclear weapon," he said.
"Each day that point is getting closer, and that is why I speak today with such a sense of urgency and that is why everyone should have a sense of urgency."
Netanyahu added that "the red line must be drawn on Iran's nuclear enrichment program because these enrichment facilities are the only nuclear installations that we can definitely see and credibly target."
"I believe that faced with a clear red line, Iran will back down. And this will give more time for sanctions and diplomacy to convince Iran to dismantle its nuclear weapons program all together," he added.
Netanyahu was referring to Iran's enrichment of uranium to 20 percent purity, a level it says is required for medical isotopes but which also brings it close to bomb-fuel grade.
An August report by U.N. inspectors said Iran has stockpiled 91.4 kg of the 20 percent material.
According to the U.N. nuclear watchdog, around 25 kg of uranium enriched to a 90 percent purity level would be needed for a single nuclear weapon.
Israel, believed to have the Middle East's only atomic arsenal, sees a nuclear-armed Iran as a threat to its existence and has expressed frustration over the failure of diplomacy and sanctions to rein in Tehran's nuclear activity. Iran says it is enriching uranium only for peaceful energy purposes, not for nuclear bombs.
U.S. President Barack Obama, seeking re-election on Nov. 6, warned Iran on Tuesday in his speech to the General Assembly that he would do what it takes to prevent Tehran from getting nuclear arms and that "time is not unlimited" for diplomacy to resolve the issue.
Iranian President Mahmoud Ahmadinejad said this week he did not take seriously the threat that Israel could launch a military strike on Iran's nuclear facilities.