Noting that Israel had stayed out of Syria's protracted civil war, in which Tehran backs Assad, Netanyahu said increasing Iranian encroachment required "a new calculus".
"He is no longer immune, his regime is no longer immune. If he fires at us, as we've just demonstrated, we will destroy his forces," the Israeli leader said at an event organised by the Policy Exchange think tank in London.
Last month, Israel launched a large-scale attack on purported Iranian targets in Syria following what it said was a barrage of rockets fired by Iran from the country toward its forces in the occupied Golan Heights.
Even before that, Israel had been blamed for a series of recent strikes inside Syria that killed Iranians, though it has not acknowledged them.
"Syria has to understand that Israel will not tolerate the Iranian military entrenchment in Syria against Israel," Netanyahu added.
"The consequences are not merely to the Iranian forces there but to the Assad regime as well," he said, adding: "I think it's something that he should consider very seriously".
Iran deal 'done'
Netanyahu is on a three-day European tour - visiting Berlin and Paris earlier this week - marked by strategic differences on Iran, as its leaders attempt to rescue the nuclear deal after US withdrawal in May.
He met Wednesday with British Prime Minister Theresa May, who reiterated London's "firm commitment" to the accord, according to Downing Street.
But the Israeli leader said Thursday "the weight of the American economy" was already dooming "this very bad agreement".
"It's a done deal - in the other meaning of the word," he added, noting companies were already pulling out of Iran under threat of damaging US sanctions.
"You have to choose whether to do business with Iran, or forego doing business with the United States ... that's a no-brainer and everybody's choosing it effectively as we speak."
Theresa May arrives for her bilateral meeting with Benjamin Netanyahu. Source: AP
Netanyahu said he had reiterated his dislike for the 2015 deal, which offers sanctions relief in exchange for strict limits on Iran's nuclear activities.
However, the focus of his discussions in Europe had been on reducing Iran's presence in Syria, he added.
"I found considerable agreement on that goal."
At the same time, he criticised his European hosts for an outdated approach to the region.
Netanyahu said Iranian expansion had led to a "realignment" of relations with Arab states in the Middle East who also oppose Tehran - something Britain and western Europe were "evidently not understanding".
"There is a whole realignment taking place in the Middle East - they're sort of stuck in the past," he added, displaying a map of the world with numerous countries highlighted to show Israel's "expanding diplomatic horizons".
"I think there's a west European problem with recognising that the world is changing," he said.
