Gantz met reporters Wednesday whereas exploring partnerships with secular center-left events.
Israel's President Reuven Rivlin is expected to give his blessings and approval to a larger coalition of all parties.
With almost all votes counted Thursday, Gantz's centrist Blue and White party stood at 33 seats in the 120-seat parliament.
A prime minister needs to command a 61-seat majority in the Knesset (parliament). He can muster only 55 seats.
Netanyahu repeated the plea later Thursday at a memorial for late former Israeli President Shimon Peres, where he and Gantz, a former military chief of staff, shook hands in their first public encounter since Tuesday's vote.
"Judging by the present situation assessment, Netanyahu is no longer capable of winning an election in Israel".
The politician's comments echo the silent satisfaction among Palestinian leadership over Netanyahu's setback. After Attorney General Avichai Mendelblit warned Netanyahu of the legal requirement to involve the security cabinet in any decision that could lead to a war, Netanyahu backed down, leaving the IDF to attack several Hamas targets in Gaza without causing any casualties. Israel's Arab parties have traditionally not endorsed anyone for prime minister. A majority in the Knesset could grant him immunity from prosecution.
U.S. President Donald Trump has said that he planned to meet Netanyahu at the General Assembly. He tried, and failed, to pass legislation that would install monitoring cameras in voting booths as he made unfounded claims of fraud in Arab districts. Last week, Facebook suspended Netanyahu's chatbot for 24 hours after it sent messages stating that "Arabs want to annihilate us", which the technology giant said breached its policy on hate speech.
The deadlock follows the second Israeli elections this year, which were called because Netanyahu failed to cobble together a coalition following the April vote.
On Thursday, Netanyahu called on Gantz to join him and his traditional allies in a unity government.
Tuesday's election results are a devastating result for Netanyahu personally for whom the ability to form a government is his stay out of jail card. Ex-defence minister Avigdor Lieberman could prove to be kingmaker, with the reported results showing his nationalist Yisrael Beitenu with nine seats. "During the elections, I called for the establishment of a right-wing government, but, sadly, the results of the elections have shown that this is not possible", said 69-year-old Netanyahu, pointing out that the nation did not definitively side with either bloc.
It went with other reports of irrational, extravagant demands and a recent criminal conviction for his wife Sara for ordering fancy, catered meals worth tens of thousands of dollars when there was a dedicated, publicly funded chef at the prime minister's residence.