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An Israeli official quoted him saying: "Statements in the Swedish press were outrageous. We are not expecting an apology - we expect condemnation."
Sweden has refused to condemn the article, citing freedom of expression.
But Mr Netanyahu reportedly compared the claims to medieval "blood libels", which alleged that Jews used the blood of Christian babies during religious ceremonies.
Israel's Interior Ministry has said it is freezing new visas to Swedish journalists, although those already in Israel can continue working.
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The story - in Sweden's top-selling daily newspaper - claimed Israeli soldiers kidnapped Palestinian youths and returned their dismembered bodies a few days later.
The tabloid claimed organs were then sold for transplant - with incidents dating back to 1992.