The attack in Douma occurred late last Saturday amid a resumed offensive by Syrian government forces after the collapse of a truce with the Army of Islam rebel group.
Syrian opposition activists and rescuers said poison gas was used on the rebel-held town near the capital, after families were reportedly found suffocated in their homes and shelters with foam around their mouths.
Reports suggest more than 500 people, mostly women and children, were taken to medical centres with breathing problems and burning sensations in their eyes.
Mr Netanyahu commented on the attack at the opening of Israel’s annual Holocaust commemorations, saying: “The events of the last days teach that standing up to evil and aggression is a mission that is incumbent upon every generation.
“We saw the Syrian children who were slaughtered with chemical weapons.
“Our hearts were rent by the horrific sights.”
Israel was accused by Syria, Iran and Russia of being behind an air strike on Monday which hit a Syrian air base, killing seven Iranians and at least 14 individuals in total.
Israel strongly denies the accusations.
And amid growing tensions between Israel and Iran, Russian President Vladimir Putin asked Mr Netanyahu in a phone call on Wednesday to avoid steps that could increase instability in Syria.
Mr Putin stressed the importance of respecting the sovereignty of Syria, and called for Israel to refrain from any action that could further jeopardise the security and stability of the nation.
Mr Netanyahu however said Israel would continue to counter Iran’s attempts to build up its military presence and influence in Syria.
A statement from the Israeli Prime Minister’s office said: “The Prime Minister reiterated that Israel will not allow Iran to establish a military presence in Syria.”
In his Holocaust memorial speech, Mr Netanyahu slammed the landmark nuclear deal between Iran and world powers, and threatened Iran’s leaders, saying: “I have a message for the leaders of Iran: Don’t test Israel’s resolve.”
He also appealed to the Iranian people, saying: “The regime is oppressing you and when this regime disappears off the face of the earth then our two peoples can live together once more in coexistence.”
Calling for action against Iran and Syria, Mr Netanyahu invoked events from WWII and the Holocaust.
He said: “One great lesson that has been with us since the Holocaust: Murderous evil that is not stood up against spreads rapidly and gradually, and threatens all of humanity.
“The leaders of the free world wanted to prevent war and led to the conquest of all of Europe.
“Their unwillingness to pay the price to curb aggression early on, led to humanity paying the price.”