"Any reconciliation between the Palestinian Authority (PA) and Hamas must include honoring worldwide agreements and the Quartet conditions, first and foremost among them, recognizing Israel and disarming Hamas", the statement said.
Reconciliation could also pose a dilemma for worldwide efforts to reach an Israeli-Palestinian peace deal since Hamas has not recognized Israel, unlike the Abbas-led Palestine Liberation Organization (PLO).
It was signed in Cairo by new Hamas deputy leader Salah al-Aruri and Azzam al-Ahmad, the head of the Fatah delegation for the talks. And the Palestinian Authority is hoping that reconciliation will allow the Palestinian territories to have a unified voice to press Israel for an independent state.
With Hamas in control, conditions in Gaza deteriorated.
In an online posting later, Netanyahu warned that the deal would make "peace much harder to achieve".
Hamas and Fatah announce reconciliation agreement in Cairo
Hamas and Fatah officials held two days of talks in Cairo this week about a Palestinian Authority return to Gaza. Hamas and Fatah organisations began negotiations on reconciliation last Tuesday through Egypt.
Netanyahu said Israel would oppose "any reconciliation in which the terrorist organization Hamas does not disarm and end its war to destroy Israel". It also called for the immediate release of Israeli civilians Avra Mengistu and Hisham a-Said, who are being held by Hamas, and the remains of fallen Israeli soldiers Oron Shaul and Hadar Goldin.
After a decade of hostility and recrimination, the two main Palestinian factions came together in Cairo on Thursday to sign a reconciliation deal that holds out the tantalizing prospect of a united Palestinian front. From now, any Israeli cooperation with Abbas is cooperation with Hamas. "We must make this clear, because there will be new global pressure on Israel to renew negotiations with the PA following the agreement".
Hamas and Fatah's high-level delegations kicked off reconciliation talks in the Egypt capital, Cairo on Tuesday in a bid to restore the territorial unity of the West Bank and the Gaza Strip.
"There is nothing Israel wants more than peace with all our neighbors".
Under the terms of the deal, the Ramallah-based Palestinian unity government will assume political and administrative responsibility for the Gaza Strip no later than December 1. In return, Cairo pressed Hamas to move forward on reconciliation with Fatah. A year of tense unity government administration ended after fights in 2007 which led to Hamas expelling Fatah from the coastal enclave altogether.