Netanyahu announced in late March that Gallant would be removed from the ministerial post after the former army general sharply criticized the Israeli government's attempts to change the mandate of the Supreme Court.
The demand that Gallant must go, then, came from several leaders within Netanyahu's right-wing coalition.
On Monday, Netanyahu announced that Gallant is defense minister, and that the decision is due to the deteriorating security situation in the Middle East.
"We stand together and we work together around the clock," Netanyahu said of his decision.
"Gallant will remain in office and continue to defend Israeli citizens," Netanyahu told a news conference.
Yoav Gallant is considered to have significant trust capital within Netanyahu's Likud party, and Netanyahu wants to avoid a split within the party.