Politicians and party leaders had urged Mr Netanyahu to cancel the trip after the Hungarian leader last year drew criticism for praising Miklos Horthy, Hungary's World War II-era ruler who introduced anti-Semitic laws and collaborated with the Nazis.
Hungary in December abstained when the United Nations General Assembly voted overwhelmingly to reject the US recognition of Jerusalem as Israel's capital.
"You have stood up for Israel time and time again in international forums. It is deeply appreciated, and it is important… on this Hungary has led the charge many, many times and I thank you for it,” Mr Netanyahu said, at a joint press conference.
“I heard you speak, as a true friend of Israel, about the need to combat anti-Semitism,” he added.
Mr Orbán, for his part pledged “zero tolerance” for anti-Semitism and to cooperate “in the war against” it.
"All of the Jewish citizens in Hungary are under the protection of the government,” he said.
Yet, the visit has sparked uproar in Israel, where there were calls for it to be cancelled.
After praising Miklos Horthy last year, Orbán denounced George Soros, Hungarian-American dual national, as one of Hungary's enemies that “do not believe in work but speculate with money”.
Opposition MP Yair Lapid, head of the centrist Yesh Atid and potential rival to the prime minister, labelled the trip a “disgrace”.
“Today Netanyahu will give honour to Prime Minister Orbán of Hungary, who praised the anti-Semitic ruler [of Hungary in World War II] who collaborated with the Nazis in the extermination of Hungarian Jewry. A disgrace!" he wrote on Twitter.
Mr Orbán, who landed in Tel Aviv on Wednesday evening, met Israeli President Reuven Rivlin and one of Israel’s chief rabbis and later took a tour of the Yad Vashem Holocaust memorial.
On Friday he is set to visit the Western Wall before departing.
He has no scheduled talks with Palestinian leaders, breaking usual protocol for visiting EU leaders. Only his deputy, Zsolt Semjen, will visit Bethlehem's Church of the Nativity in the occupied West Bank.
Mr Orbán has also faced criticised from within the EU, over a proposed law which would criminalise those who offer help to migrants. The legislative package was dubbed the “stop Soros” laws by the Hungarian government as it targeted Soros’ open-border values and advocacy. Pro-government media said the bills could see Mr Soros banned from Hungary.
But despite accusations that Mr Orbán had stoked anti-Semitism in Europe, he has taken a firm stance in support of Israel at a time when Mr Netanyahu is increasingly looking to European allies as he faces mounting criticism from the EU.
Mr Orbán’s brief stay comes one year after a landmark visit by Netanyahu to Budapest, the first visit to Hungary by an Israeli premier since the fall of Communism in 1989.
At the time, Mr Netanyahu praised all of the Visegrad Group, which includes Hungary, Poland, Slovakia and the Czech Republic, and whose nationalist stances have been a thorn in Brussels’ side.