An aide to Palestinian President Mahmoud Abbas told Ynet that speech "dealt a deadly blow to the peace process".
"Netanyahu's speech was a right-wing speech that destroyed the basis for negotiations when it talked of a unified Jerusalem, removing the refugee issue from the talks and recognizing a Jewish state. This is a speech that is about setting terms," he said.
Abbas spokesman Nabil Abu Rdainah was also critical of the address. "Netanyahu's remarks have sabotaged all initiatives, paralyzed all efforts being made and challenges the Palestinian, Arab and American positions," he said, noting the prime minister's demand that Jerusalem be the undivided capital of Israel and that Palestinian refugees not be allowed into Israel.
"This will not lead to complete and just peace," Abu Rdainah said. "His remarks are not enough and will not lead to a solution."
The Palestinian Authority's labor minister, Ahmed Majdalani, said Netanyahu's speech could not provide a foundation for negotiations.
"Netanyahu encouraged the settlers and complimented them, which indicates total identification with them. This speech has blown apart all of the political foundations of the peace process."
Hamas also slammed Netanyahu's address, saying it reflected "the racist and extremist ideology of Netanyahu and denies all the rights of the Palestinian people".
Hamas spokesman Fawzi Barhum told AFP that "this speech is the reiteration of the policy of his government, which aims at transforming the Palestinian people into a tool to protect the occupation."
Reuters and AFP contributed to this report