Mr Netanyahu's popularity has soared this year
Mr Netanyahu won 73% of the vote. In his victory speech, he vowed to focus Likud's efforts on bringing Israel a new leadership.
Recent polls show Mr Netanyahu would be a popular choice for prime minister.
Mr Netanyahu was prime minister from 1996 to 1999 and has since held several senior cabinet posts.
Party officials released final election results early on Wednesday - showing Mr Netanyahu had far outstripped his main rival, the hardline religious challenger, Moshe Feiglin, who won 23% of the vote.
Last year Mr Netanyahu led Likud to a crushing defeat in parliamentary elections.
But BBC correspondents say his popularity has soared in opinion polls since last year's inconclusive war in Lebanon.
Israeli general elections are due in 2010 but Prime Minister Ehud Olmert's approval ratings have dropped and some commentators anticipate elections as early as next year.
Mr Olmert heads the centrist Kadima party.
"Tonight the internal contest ended, and as of tomorrow, we will focus our efforts on bringing a new leadership to Israel," Mr Netanyahu told supporters in Tel Aviv on Tuesday.
He had appealed to Likud members to vote as he feared a low turnout might play into the hands of Mr Feiglin.
Around 40% of Likud's 95,000 members cast ballots across the country. Polling stations were even opened in some Israeli holiday resorts.
Israeli Prime Minister Benjamin Netanyahu actively pushed for a military strike on Iran, according to a report published in the Israeli newspaper  on Thursday.

A document revealed by Wikileaks, dated July 20, 2007, shows that Mr. Netanyahu, leader of the Likud party, urged an attack on Iran in exchange for joining the government at the time, led by Ehud Olmert.

Mr. Netanyahu's request was made as part of discussions to form a government of national unity between Likud and Mr. Olmert's Kadima party, according to the leaked cable, classified as "confidential" and penned by Marc. J. Sievers, who was at the US embassy in Tel Aviv as a political counselor.

An advisor to Mr. Netanyahu told American officials at the time that the Likud leader was willing to take the post of foreign minister, while Mr. Olmert would have become prime minister. 

However, Mr. Netanyahu demanded military action against Iran as the price for his participation in the proposed coalition. According to the advisor cited in the US cable, Mr. Netanyahu urged the Kadima leader to "galvanize Israel for action against Iran."

Israel has previously entertained the possibility of military strikes to prevent Iran from attaining nuclear weapons capability. In November 2010, Iran announced uranium enrichment activities had been disrupted by the  computer virus. The Iranian government later accused the US and Israel of responsibility for the malware.

Israel and Western powers have accused Iran, whose president, Mahmoud Ahmadinejad, has called for Israel to be "wiped off the map," of seeking to obtain nuclear weapons under the guise of a civilian nuclear program.


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