Former military chief Benny Gantz made the comments in an interview with the Ynet news site. It was his first interview with the Israeli media since his maiden political speech last week.
He has so far said little about the Palestinian issue, or whether he supports the establishment of a Palestinian state. But in Wednesday's interview, he said the continued rule over the Palestinians is not an Israeli interest.
"We need to find a way in which we're not controlling other people," he said.
With peace talks frozen throughout most of Netanyahu's decade-long rule, Gantz's comments were welcomed by the Palestinians.
"It's encouraging if he succeeds and he sticks to this opinion," Nabil Abu Rdeneh, spokesman for President Mahmoud Abbas, told reporters.
In the interview, Gantz was asked whether he favored another unilateral move similar to the Gaza pullout, which is widely seen as a failure in Israel. Two years after the pullout, the Hamas militant group seized control of Gaza.
Gantz said the withdrawal was a "diplomatic move" by the government that was carried out in a "painful but good manner."
"We need to take the lessons learned and implement them elsewhere," he said.
His opponents quickly lambasted him. Netanyahu's Likud Party warned that Gantz would form a "leftist" government backed by Arab parties, while the hard-line nationalist "New Right" party claimed that Gantz is planning on "expelling" more Jews from their homes.
Gantz's party later put out a clarification saying "no unilateral decisions will be made on settlement evacuation."
The interview came as Likud held its primary election to select its list of candidates for the parliamentary election. In a setback to Netanyahu, his chief internal rival made a strong showing, despite a campaign by the prime minister to sideline him.
Near final results published Wednesday showed former Cabinet minister Gideon Saar finishing third in the internal party vote. Netanyahu views Saar as a potential replacement and had lobbied party members hard to push him down the list.
The Likud party has a strong lead in polls and is expected to win around 30 out of parliament's 120 seats. With Netanyahu facing a series of corruption charges, the primaries have taken on added significance as an indicator for his potential successor within the party.
Transportation Minister Israel Katz and Knesset speaker Yuli Edelstein came in first and second after Netanyahu.
Gantz said he did not think Netanyahu should remain as prime minister if he is indicted.