Palestinians reacted angrily.
Palestinian negotiator Saeb Erekat said Netanyahu's comments are tantamount to a "total rejection of the Obama vision and speech."
"Without Mr. Netanyahu committing to two states on the 1967 lines, with mutually agreed swaps, he is not a partner to the peace process, and, I think, when President Obama gave him a choice between dictation and negotiations, he chose dictation, and when he gave him a choice between settlements and peace, he chose settlements."
"I don't think we can talk about a peace process with a man who says the 1967 lines are an illusion," Erekat said.
Indeed, the comments from Netanyahu and Obama, after a longer-than-scheduled meeting that lasted more than an hour-and-a-half, sounded more like a recitation of the many barriers to peace than an explanation of why there should be any reason for optimism.
The two leaders did not take questions from reporters, and White House press secretary Jay Carney was unable in a subsequent briefing to point to any concrete signs of progress.
That left the way forward as cloudy as ever. Netanyahu is to address Congress on Tuesday to press Israel's position.
International pressure is growing on Netanyahu and Obama to answer the demands of the Palestinian people as revolts sweeping the Arab world crest against Israel itself. Palestinian protesters marched on the Jewish state's borders this week, and at least 15 people were killed.
Netanyahu was informed shortly before Obama's speech of its contents by Secretary of State Hillary Clinton, according to U.S. officials. Netanyahu sought in vain to get the border language removed from the speech, the officials said, and was incensed when he was told it was staying in.
Obama's stance on the 1967 borders was not a major policy change, since the United States -- along with the international community and even past Israeli governments -- previously had agreed to building on the 1967 lines.
However, it was the first time he'd explicitly endorsed those borders as a starting point, while also embracing land swaps, and it was viewed by Israelis as a concession to Palestinian demands.
In the face of Israeli anger, Carney argued Friday that Obama's articulation of the 1967 borders didn't amount to a new position.
Obama on Thursday repudiated the Palestinians' pursuit of unilateral statehood through the United Nations, but it was unclear whether his statement on the 1967 borders as the basis for negotiations would be sufficient to persuade the Palestinians to drop their quest for U.N. recognition.