The vote triggered a fresh election, which will be held on 17 September.
Mr Netanyahu was unable to reach a deal for a fresh right-wing coalition following last month's election.
At the heart of the impasse was a military conscription bill governing exemptions for ultra-Orthodox Jewish seminary students.
It is the first time in Israel's history that a prime minister-designate has failed to form a coalition.
Parliament voted 74-45 in favour of dissolving itself after Mr Netanyahu missed a midnight local time (21:00 GMT) deadline on Wednesday.