Israel recalled its ambassador to Sweden for consultation, following Stockholm’s recognition of the state of Palestine, a spokesman for Israel's foreign ministry said.
"This indeed reflects our irritation and annoyance at this unhelpful decision which does not contribute to a return to negotiations," Emmanuel Nachshon told AFP.
Sweden officially recognised the state of Palestine on Thursday, becoming the first western EU member to do so.
"It is an important step that confirms the Palestinians' right to self-determination," Swedish Foreign Minister Margot Wallstroem wrote in the mass-circulation Dagens Nyheter daily, less than a month after the country's new prime minister announced the government's plans to make the controversial move.
Following the announcement, Israel denounced the move as "deplorable".
"The decision of the Swedish government to recognise a Palestinian state is a deplorable decision which only strengthens extremist elements and Palestinian rejectionism," Israel's Foreign Minister Avigdor Lieberman said in a statement.
The United States called the decision "premature", saying a Palestinian state can only come through a negotiated solution between Israelis and Palestinians.
Palestinians, meanwhile, hailed Sweden's recognition as "historic."
The move comes as Israeli-Palestinian tensions soar in Jerusalem, following months of almost daily clashes in the city's occupied eastern part.