Protesters braved the rain for the rally, brandishing signs with slogans decrying a "government of shame" and urging: "bring down the dictator", AFP correspondents said.
Israeli media reported 80,000 people joined the rally, citing police sources. Police gave no official estimate after reporting 20,000 protesters earlier in the evening.
The demonstration is the biggest since Netanyahu's new government took power in late December in Israel, a country of just over nine million.
"The situation is worrying and scary," said 22-year-old protester Aya Tal, who works in the high-tech industry.
"They want to take away our rights... We must unite."
Other rallies were held in Jerusalem, outside the prime minister's and the president's residences, and in the northern city of Haifa, local media reported.
Already Israel's longest-serving premier, Netanyahu returned to power at the head of a coalition with extreme-right and ultra-Orthodox Jewish parties, some of whose officials now head key ministries.
Protesters called for Netanyahu, who is fighting corruption charges in court, to resign.
"Bibi (Netanyahu) doesn't want a democracy, we don't need fascists in the Knesset," read one sign at the Tel Aviv protest, referring to the Israeli parliament.
'Save democracy'
The crowd filled the streets surrounding Tel Aviv's Habima Square and chanted "democracy, democracy", according to an AFP correspondent.
Opposition parties had called on Israelis to join the demonstration -- organised by an anti-corruption group -- to "save democracy" and in protest at a planned judicial overhaul.
Justice Minister Yariv Levin announced on January 4 a controversial plan to hand more powers to lawmakers in appointing judges and overriding Supreme Court decisions.
In Israel, which does not have a constitution, the Supreme Court currently has the authority to repeal laws it considers discriminatory.
Former Supreme Court judge Ayala Procaccia told the crowd the Israeli public "will not accept... the destruction of the basic values of our system."
"We are at a fateful moment for the future of Israel," she said.
The new government has also announced intentions to pursue a policy of settlement expansion in the occupied West Bank and carry out social reforms that have worried members and supporters of the LGBTQ community.
The rally included messages against the Israeli occupation of the Palestinian territories and calls to protect the rights of the LGBTQ community.
"There's no democracy with the occupation," read one sign.
