Mr. Erdogan's extraordinary outburst follows last week's move by Israel's parliament to pass a new law defining the country as the nation state of the Jewish people.
The legislation, adopted after a tumultuous Knesset session, makes Hebrew the national language and defines the establishment of Jewish communities as a vital part of the national interest.
Comment: Not simply "Jewish communities", but illegal settlements in occupied land.
Arabic, previously considered an official language, was acknowledged with special status.
"This measure has shown without leaving the slightest room for doubt that Israel is the world's most Zionist, fascist and racist state," Erdogan said in a speech to his ruling party, as reported by AFP.
Mr.Erdogan went on to allege there was "no difference between Hitler's obsession with the Aryan race and Israel's understanding that these ancient lands are meant only for Jews."
"The spirit of Hitler, which led the world to a great catastrophe, has found its resurgence among some of Israel's leaders," he added.
Israeli Prime Minister Benjamin Netanyahu responded by saying that under Erdogan, Turkey was turning into a "dark dictatorship," accusing the Turkish president of "massacring Syrians and Kurds."
"Erdogan is massacring Syrians and Kurds and has imprisoned tens of thousands of his citizens," Netanyahu said in a statement.
"Turkey under Erdogan is becoming a dark dictatorship, while Israel is meticulously maintaining equal rights for all its citizens, before and after the law."
Comment: What?! Declaring Israel the land of the Jewish people implies that non-Jewish minorities will always be second class citizens.
Education Minister Naftali Bennett also hit back, saying "The State of Israel will not accept morality lectures from a dictator who hunts down and murders members of the Kurdish minority in his country and elsewhere."
This is not the first time President Erdogan has taken issue with Israel.
After Turkey recalled its ambassadors to Israel and the United States in May to protest the Israeli response to riots along the Gaza border fence, he called Israel a "terror state" and denounced its actions as "genocide."
Comment: Much can be criticized of Erdogan, but it's hard to argue with him on this one!