Benjamin Netanyahu has claimed Hitler only decided to carry out the Final Solution after being convinced by a Palestinian leader.
Speaking at the World Zionist Congress, the Israeli Prime Minister said the plan to exterminate European Jews was developed after the Nazi leader met the Mufti of Jerusalem, Haj Amin al-Husseini.
Mr Netanyahu told congress delegates in Jerusalem that al-Husseini had travelled to Germany and warned the Nazi leader that merely expelling Jews would lead to mass arrivals in British Mandate Palestine.
The Israeli leader said: "My grandfather came to this land in 1920 and he landed in Jaffa, and very shortly after he landed he went to the immigration office in Jaffa.
"And a few months later it was burned down by marauders. These attackers, Arab attackers, murdered several Jews, including our celebrated writer [Yosef Haim] Brenner.
"And this attack and other attacks on the Jewish community in 1920, 1921, 1929, were instigated by a call of the Mufti of Jerusalem, Haj Amin al-Husseini, who was later sought for war crimes in the Nuremberg trials because he had a central role in fomenting the Final Solution.
"He flew to Berlin. Hitler didn’t want to exterminate the Jews at the time, he wanted to expel the Jews. And Haj Amin al-Husseini went to Hitler and said, 'If you expel them, they'll all come here.' 'So what should I do with them?' he asked. He said, 'Burn them'."
Mr Netanyahu’s comments on Tuesday evening caused shock and anger in Israel and throughout the diaspora.