In a statement, Mr Lapid congratulated Mr Netanyahu and has instructed his office to prepare an organised transition of power.
"The state of Israel comes before any political consideration,” he said.
“I wish Netanyahu success, for the sake of the people of Israel and the State of Israel."
Mr Lapid, who has served as interim prime minister for four months, conceded defeat after a near-final vote count showed Mr Netanyahu securing a parliamentary majority with his religious and ultranationalist allies.
Mr Netanyahu is expected to form the country’s most right-wing government in history when he takes power, likely in the coming weeks.
The elections, Israel’s fifth in four years, came amid a protracted political crisis that saw voters divided over Mr Netanyahu’s fitness to serve while on trial for corruption.
The final ballots were still being counted late Thursday.
Mr Netanyahu is expected to rely on the ultra-nationalist Religious Zionism party to control a majority in Israel’s parliament, the Knesset.
His opponents in the current coalition, led by Mr Lapid, were expected to win 50 or 51 seats in the 120-seat parliament, with some seats held by a small unaffiliated Arab party.
The main candidate in the far-right Religious Zionism party, which will prop up Mr Netanyahu, Itamar Ben-Gvir, is a disciple of an anti-Arab rabbi.
Mr Ben-Gvir says he wants to end Palestinian autonomy in parts of the West Bank.
The party’s leader, Bezalel Smotrich, a West Bank settler who has made anti-Arab remarks, has his sights set on the defence ministry.
This would make him the overseer of the military and Israel’s West Bank military occupation.
The Labour party, once a mainstream fixture of Israeli politics and which supports Palestinian statehood, was teetering just above the electoral threshold.
As vote counting neared an end, the anti-occupation Meretz also appeared headed for political exile for the first time since it was founded in the 1990s.
The polarising Netanyahu, Israel’s longest-serving leader, was ousted in 2021 after 12 consecutive years in power by an ideologically-diverse coalition that included for the first time in Israel’s history a small Arab party.
The coalition collapsed in the spring over infighting.
Netanyahu is charged with fraud, breach of trust and accepting bribes in a series of scandals involving wealthy associates and media moguls.
He denies wrongdoing, claiming the trial is a witch hunt against him orchestrated by a hostile media and a biased judicial system.