Mr Netanyahu said the move would honour Mr Trump's recognition of Israeli sovereignty over the Golan in March.
Israel seized the Golan from Syria in 1967 and annexed the territory in 1981. The move has not been recognised internationally.
Syria said Mr Trump's decision was "a blatant attack on its sovereignty".
Mr Netanyahu, who has secured a fifth term in office in the recent Israeli elections, has been on a trip to the region with his family for the week-long Passover holiday.
"All Israelis were deeply moved when President Trump made his historic decision to recognise Israel's sovereignty over the Golan Heights.
"I intend to bring to the government a resolution calling for a new community on the Golan Heights named after President Donald J Trump", he said in a video message.
For decades, Washington did not recognise Israel's sovereignty over the Golan, but Mr Trump announced his plan to overturn US policy in a tweet on 21 March.