"Today we have settled the score. Today evil has been dealt a blow but our task has still not been completed," Netanyahu said in a video statement.
"To the dear hostage families, I say: this is an important moment in the war. We will continue full force until all your loved ones, our loved ones, are home," he added.
The Israeli military released drone footage it said showed the last moments of militant boss, caked in dust in a bombed-out house apparently severely wounded and attempting to throw a projectile at the camera.
Unverified graphic footage circulating on social media appeared to show a corpse roughly resembling Sinwar in a military tactical vest and headscarf with distinctive crooked teeth.
Israeli authorities said DNA and dental records analysis gleaned from the site and matched to records from Sinwar's over 20 years in Israeli prisons proved his identity.
Hamas has yet to confirm his death.
President Joe Biden said US intelligence had aided Israel to locate senior Hamas leaders, calling it a "good day".
Israel has had every right to eliminate the leadership and military structure of Hamas. Hamas is no longer capable of carrying out another October 7," Biden said in a statement.