Shlomo Filber's decision to testify for the state against his former boss is a dramatic turn for Netanyahu, whose inner circle had so far seemed watertight. Filber's change of heart could leave the tough-talking Netanyahu at his most vulnerable yet, with one critic writing him off as a "political corpse".
The development has also fueled speculation that Netanyahu, 68, will call a snap election to try to stall legal proceedings during the campaign and rally his right-wing power base behind him.
Israel's dominant political figure for a generation - in power since 2009 and for 12 years total since 1996 - Netanyahu calls the allegations against him a "witch hunt" and has said he will seek a fifth term in a national ballot due in late 2019.
Filber, who was appointed by Netanyahu to head the Communications Ministry, was arrested this week along with top executives at Bezeq Telecom (BEZQ.TA), Israel's largest telecommunications company.