The protest was held outside Netanyahu's residence, the protesters held signs reading "Bibi go home".
An Israeli woman, Dana, who was among the protesters said that violence is not the way to solve the conflict.
"We here to demonstrate against the government because of the incitement that we believe comes from our side and not only from the Palestinian side. Perhaps, mostly from the Israeli side, the Israeli government. And of course this is also a demonstration against violence because we believe it is not the way," she said.
Eleven days of bloodshed in which four Israelis and 20 Palestinians, many of whom had carried out knife attacks, have been killed in Jerusalem, the Israeli-occupied West Bank, Gaza and Israeli cities have raised concerns that a new Palestinian uprising may be brewing.
Earlier on Saturday two Palestinians were shot dead by police after stabbing at least four Israelis in separate knife attacks near Jerusalem's walled Old City, Israeli police spokesman Micky Rosenfeld said.
Protests have also spread to several Arab towns in Israel, with demonstrators blocking roads and throwing stones and firecrackers at police.
The violence has been fuelled by Palestinian fears that visits by Jewish groups and lawmakers to the Jerusalem Old City plaza revered in Judaism as the site of two destroyed biblical temples, are eroding Muslim religious control of the al-Aqsa mosque compound, Islam's third holiest shrine.
Israeli Prime Minister Benjamin Netanyahu has said repeatedly that he will not allow any change to the arrangements under which Jews are allowed to visit the site but non-Muslim prayer is banned.
His assurances over conditions at the site, known as Temple Mount to Jews and Noble Sanctuary to Muslims, have done little to quell alarm among Muslims across the region.
The almost daily Palestinian knife attacks and clashes between Israeli soldiers and stone-throwing Palestinians are not at the levels of violence of past Palestinian uprisings, but the escalation has prompted talk of a third "intifada".
Both Netanyahu and Palestinian President Mahmoud Abbas have called for calm and Palestinian police continue to coordinate with Israeli security forces to try to restore order, but there are few signs of the violence dying down.
Palestinians want East Jerusalem, the West Bank and Gaza - lands Israel captured in the 1967 Middle East war, for a future state. U.S.-brokered peace talks broke down in April 2014.
