Israeli Defense Minister Israel Katz said the military would stop the boat carrying climate advocateGreta Thunberg and several other activists to Gaza.
The British-flagged Madleen aims to deliver humanitarian aid to the war-torn territory, which has been blockaded by Israel.
"I instructed the IDF to act so that the Madleen ... does not reach Gaza," Katz said in a statement. "To the antisemitic Greta and her Hamas-propaganda-spouting friends, I say clearly: You'd better turn back, because you will not reach Gaza."
Operated by the pro-Palestinian Freedom Flotilla Coalition (FFC), the ship left Sicily on June 6 and is currently just off the Egyptian coast.
Thunberg said she joined the mission to "challenge Israel's illegal siege and escalating war crimes" in Gaza and highlight the desperation for humanitarian aid.
FFC press officer Hay Sha Wiya said on Sunday the boat was currently some 160 nautical miles (296 kilometers) from Gaza and was "preparing for the possibility of interception."
In addition to Thunberg, there are 11 other crew members aboard. Among them Rima Hassan, a French member of the European Parliament.
Israeli media have reported that the military plans to intercept the yacht before it reaches Gaza and escort it to the Israeli port of Ashdod, before deporting the crew.
"The State of Israel will not allow anyone to break the naval blockade on Gaza, whose primary purpose is to prevent the transfer of weapons to Hamas," Katz said.