WASHINGTON — Defense Secretary Leon E. Panetta spoke sternly on Friday to America’s closest ally in the Middle East, telling Israel that it is partly responsible for its increasing isolation and that it now must take “bold action” — diplomatic, not military — to mend ties with its Arab neighbors and settle previously intractable territorial disputes with the Palestinians.

“I believe security is dependent on a strong military, but it is also dependent on strong diplomacy,” Mr. Panetta said. “And unfortunately, over the past year, we have seen Israel’s isolation from its traditional security partners in the region grow, and the pursuit of a comprehensive Middle East peace has effectively been put on hold.”

He balanced his criticism by noting that “Israel is not solely responsible for this isolation,” and described what he termed “an international campaign under way to isolate Israel.”

Mr. Panetta reaffirmed that the United States would sustain an “unshakable commitment to Israel’s security,” proved by “unprecedented levels of defense cooperation,” including more than $200 million in additional assistance for Israel’s “Iron Dome” missile-defense system.

But the defense secretary made clear that Israel now must prove its commitment to restoring partnerships across the region and resolving historic disputes with the Palestinians.

“Ultimately, the dream of a secure, prosperous Jewish and democratic Israel can only be achieved through two states living side by side in peace and security,” Mr. Panetta said. “With full confidence that the United States is willing and capable of ensuring that Israel can safeguard its security as it takes the risks needed to pursue peace, now is the time for Israel to take bold action and to move towards a negotiated two-state solution.”

Asked specifically what Israel should do first, Mr. Panetta replied, “Get to the damn table” — that is, return to negotiations.

Mr. Panetta also called on Israel to “reach out and mend fences with those who share an interest in regional stability,” specifically Turkey, Egypt and Jordan. If those gestures are rejected in Ankara, Cairo and Amman, he said, “the world will see those rebukes for what they are.”

Mr. Panetta spoke to the Saban Center for Middle East Policy at the Brookings Institution, a policy center here. During the evening address, he identified Iran as the most significant national security threat facing the United States, allies and partners in the region.

Notable was the phrasing of a warning to Iran: that any action to block free transit of regional oil shipments and other commerce would be a “redline,” a term describing an unacceptable action that would be countered with an American response.

“No greater threat exists to the security and prosperity of the Middle East than a nuclear-armed Iran,” Mr. Panetta said, noting that a “pillar of our approach to the region is our determination to prevent Iran from developing nuclear weapons.”

He pledged the United States was committed to deterring Iran’s “destabilizing activities, particularly those that could threaten the free flow of commerce throughout this vital region. That is a ‘redline’ for the United States.”

American policy to shape Iranian action would use both inducements and penalties, diplomacy and economic sanctions, he said. But the Pentagon would always have military options ready for the president’s consideration, Mr. Panetta said.

“That’s a responsibility I take very seriously, because when it comes to the threat posed by Iran, the president has made it very clear that we have not taken any options off the table,” Mr. Panetta said.

Looking broadly across the region, Mr. Panetta also described how the United States was seeking to sustain a military presence and enhance military-to-military cooperation in the Persian Gulf after the withdrawal from Iraq at the end of this month.