The reason given by Israel is operations against the Iran-backed Hezbollah movement.
"We have created a real security zone to counter infiltration on Israel's northern border," Netanyahu said in a video statement.
The announcement was made the day after Israeli Defense Minister Israel Katz said that several bridges over the Litani River had been blown up by the Israeli military, and that large parts of southern Lebanon would be included in the zone - it is unclear how large a part of the country.
Israel has previously told residents south of the Litani River to leave the area.
Israel is being urged by several countries, including France, not to occupy areas in Lebanon.
