The move was welcomed in Israel and by Republicans on Capitol Hill.
The so-called snapback sanctions would target Iran's purchases of US dollars, metals trading and other dealings, coal, industrial-related software and its auto sector.
Lebanese President Michel Aoun said on Monday the US withdrawal from world powers' 2015 nuclear agreement with Iran would have negative consequences for Middle East stability.
Netanyahu began the cabinet meeting by once again calling US President Donald Trump “a great friend of Israel.”
"It is absolutely necessary to have this to prevent the development of nuclear weapons at a time when other parts of the world are discussing how to get them," says German foreign minister.
Iran denies seeking nuclear weapons and says it has no plans to build nuclear-capable missiles.
"We are hopeful that the United States does not make this strategic mistake," foreign ministry spokesman Bahram Qasemi was quoted as saying.
Iran has placed its military bases off limits also because of what it calls the risk that IAEA findings could find their way to the intelligence services of its US or Israeli foes.
This was the latest signal that Trump, who campaigned against the deal and at times suggested he would scrap it, has as president adopted a more toned-down posture related to the Iranian regime.