Iyad al-Halaq, 32, was killed during a police chase in Jerusalem’s Old City on May 30. A police spokesman said at the time officers suspected he was carrying a weapon.
The police internal affairs division is investigating the shooting.
“What happened to Iyad al-Halaq is a tragedy. This was a man with disabilities, autism, who was suspected – and we (now) know wrongly – of being a terrorist in a very sensitive venue,” Netanyahu said in comments that stopped short of an apology.
Palestinians have drawn comparisons between the Palestinian man’s fatal encounter with police and the death in the United States of African-American George Floyd after a police officer in Minneapolis pressed a knee into his neck while detaining him.
Hundreds of people attended Halaq’s funeral a week ago.
Palestinian officials and Halaq’s family said he suffered from severe autism and panicked and ran after the officers confronted him.
“I know that (police) are conducting examinations. We all share in the grief of the family,” Netanyahu said in public remarks to his cabinet.
Addressing Internal Security Minister Amir Ohana, who is responsible for police, at the cabinet meeting, Netanyahu said: “I expect your full investigation into this matter.”