Its main rival, the centre-left Zionist Union, fell some way behind with 24 seats, according to Israeli media.
If Netanyahu is able to put together an acceptable right-wing coalition with other parties, he will have a fourth term in office, putting him on the road to becoming Israel's longest serving Prime Minister. David Ben-Gourion, the county's founding father, currently holds this title.
During a speech in Tel Aviv after the result was revealed, Netanyahyu told supporters he had already spoken to the leaders of other right-wing parties about forming a government “without delay”. These include the pro-settler Jewish Home party led by Naftali Bennett, and a number of religious groups.
Last minute attempt
The result came as a surprise – the most recent opinion poll, published just days before the election, suggested Zionist Union had a lead over Lukid.
In the final lead-up to voting, Netanyahu started making pledges that increased his popularity among right-wing voters. He said there would be no Palestinian state if he was re-elected, and that the building of settlements would continue on occupied land.