Attorney General Avichai Mandelblit announced the decision following lengthy investigations into Netanyahu's alleged dealings in three cases.
Netanyahu is the first Israeli prime minister criminally charged while in office. He's not required by law to step down, but he's likely to face severe pressure to do so.
Speaking on live TV later on Thursday, the prime minister said it was a very sad day and that efforts to indict him equated to a coup.
"Tonight," he said, "we are witnesses to an coup attempt against a prime minister through an investigation process which is contaminated and tendentious."
The bribery charge could carry a sentence of up to 10 years, while a charge of fraud and breach of trust could lead to a three-year sentence.
In one case, Netanyahu allegedly accepted lavish gifts from two wealthy friends -- Israeli-born Hollywood mogul Arnon Milchan and Australian billionaire James Packer -- in exchange for political favors, such as promoting the moguls’ business interests or obtaining visas.
The gifts from Milchan and Packer are estimated to amount to more than 1 million shekels, about $280,000.
Mandelblit recommended charges against Netanyahu back in March.
The case in which Netanyahu allegedly received expensive gifts from the two businessmen in exchange for favors was dubbed "Case 1000." For that, Mandelbilt recommended charges of fraud and breach of trust.
In "Case 2000," the prime minister is accused of agreeing to limit the distribution of one newspaper to receive more favorable coverage in another. For that, Mandelbilt recommended a charge of breach of trust.
The third case, "Case 4000," Netanyahu, while serving as communications minister and as prime minister between 2015 and 2017, allegedly intervened with regulators in a way that benefited the controlling shareholder of Israel's largest telecommunications firm in exchange for positive news coverage on a site owner by that shareholder. He also allegedly demanded negative coverage of political opponents.
In Mandelblit's announcement of the indictment, he urged for the protection of the legal system and called for the attacks against himself and his colleagues to stop.
He added that he first announced his intention to indict Netanyahu in February and gave the prime minister's lawyer ample time to prepare a defense. After reading their arguments carefully, Mandelblit said, he and his colleagues rejected most.
At the end of Netanyahu's televised speech Thursday night he said he'd continue "to lead the country, by the letter of the law, exactly as written."
"I will continue to lead the country responsibly and with dedication," he added, "while concerned about our security and future."
ABC News' Ben Gittleson and Justin Doom contributed to this report.