So what happens next and what are the implications?
Does Netanyahu have to resign?
Netanyahu is under no strict legal obligation to quit following the police recommendations. Indeed, he has given every indication that he intends to remain in office while pursuing a legal battle.
There has been little public pressure from coalition partners for him to step down, although that could change as fellow politicians and the Israeli public study details of the cases.
There was speculation before the police recommendations were made public yesterday that Netanyahu might call early elections, seeking a public mandate that would make a prosecutor think twice before moving against him. However, several polls in recent months have shown his popularity ebbing. And Netanyahu said yesterday that he was "certain" the next elections would be held on schedule. They are not due until November 2019.
How did Netanyahu become such a dominant figure in Israeli politics?
Netanyahu has been in power on and off since 1996. The son of a hawkish Israeli historian, he was born in Tel Aviv in 1949 and moved to the United States in the 1960s when his father got an academic job there.
He is the middle of three brothers, all of whom served in elite Israeli commando units. The eldest, Yonatan "Yoni" Netanyahu, became a national hero after he was killed in 1976 leading an assault team that stormed Entebbe Airport in Uganda to rescue Israelis and other airline passengers taken hostage by radical Palestinian and West German hijackers.
Netanyahu says his brother's death "changed my life and directed it to its present course".
Telegenic, and speaking fluent American-accented English, he first gained domestic and international attention as Israel's ambassador to the United Nations during the first Palestinian intifada (uprising) that broke out in 1987.
He used this as a springboard to secure the leadership of the right-wing Likud party, running on a platform of opposition to the 1993 Oslo interim peace accords that were spearheaded by then-US President Bill Clinton, Israel's then-Prime Minister, Yitzhak Rabin, and Palestinian leader Yasser Arafat.
But Rabin was assassinated in 1995 and Netanyahu was elected Prime Minister the following year, the youngest Israeli to hold the position and the first to be born in Israel.
Despite having opposed Oslo, Netanyahu worked with Arafat on deploying Palestinian forces into the flashpoint West Bank city of Hebron, and even shook Arafat's hand in public.
But his first term as Prime Minister was widely seen as a failure. Critics assailed what was seen as a divisive style of leadership, and after losing the election in 1999 he spent a period in the second rank of Israeli politics, overshadowed even within his own party by former general Ariel Sharon.
Returning to prominence after Sharon left Likud and then suffered an incapacitating stroke in 2005, Netanyahu was elected for his second term in 2009 – 10 years after his first.
The last election was in 2015, and Netanyahu will become Israel's longest-serving leader if he serves the full four years until elections are next due in November 2019.
A familiar figure in Washington dating back to the 1980s Reagan Administration, Netanyahu most recently had a strained relationship with President Barack Obama, especially over his opposition to the July 2015 Iran nuclear deal promoted by the US leader.
But he has been much closer to Obama's successor, President Donald Trump. So proud is Netanyahu of his relationship with Trump that he has a picture of the two shaking hands at the top of his Facebook page.
Who are the potential successors?
Opinion polls suggest that Yair Lapid, head of the centrist Yesh Atid opposition party, is the strongest candidate to succeed Netanyahu if he is forced out. But other candidates could enter the race, which would shift the balance.
Outside Netanyahu's party, Defence Minister Avigdor Lieberman and Education Minister Naftali Bennett are possible candidates. Both head far-right parties in Netanyahu's governing coalition.
What would Netanyahu's departure mean for the Israeli-Palestinian conflict, and stability in the Middle East?
A cloud over Netanyahu's political future would compound the uncertainty surrounding prospects for a resumption of Israeli-Palestinian peace talks that collapsed in 2014.
If Netanyahu steps down, a successor from within Likud would need the support of the party's hardline central committee, which passed a non-binding resolution in December calling for annexation of the Israeli-occupied West Bank, captured by Israel in a 1967 war and which Palestinians want for a future state.
Recent tensions along the Syrian and Lebanese borders have not so far proved to be a major factor in domestic political calculations, as even Netanyahu's political opponents say they do not believe his legal troubles would affect his decision-making on security matters.
