The move — known as a “lunar capture” — shifted the unmanned Beresheet craft into an elliptical orbit that brought it within 500km of the Moon.
“This manoeuvre enabled the spacecraft to be captured by the Moon’s gravity and begin orbiting the Moon – and with the Moon, orbiting the Earth,” the project’s lead partners said in a statement.
The spacecraft is aiming to make history twice: as the first private-sector Moon landing, and the first from the Jewish state.
NGO SpaceIL and state-owned Israel Aerospace Industries, launched Beresheet — Hebrew for Genesis — from Cape Canaveral in Florida on February 22.
The 585kg craft took off atop a Falcon 9 rocket from Elon Musk’s private US-based SpaceX company.
The trip is scheduled to last seven weeks, with the Beresheet due to touch down on the Moon on April 11.
So far, only Russia, the United States and China have made the 384,000km journey and landed on the Moon.
“The lunar capture is an historic event in and of itself – but it also joins Israel in a seven-nation club that has entered the Moon’s orbit,” SpaceIL chairman Morris Kahn said.
“A week from today we’ll make more history by landing on the Moon, joining three superpowers who have done so.”
The Israeli mission comes amid renewed global interest in the Moon, 50 years after American astronauts first walked on its surface.
China’s Chang’e-4 made the first-ever soft landing on the far side of the Moon on January 3, after a probe sent by Beijing made a lunar landing elsewhere in 2013.
For Israel, the landing itself is the main mission, but the spacecraft also carries a scientific instrument to measure the lunar magnetic field, which will help understanding of the Moon’s formation.
It also carries a “time capsule” loaded with digital files containing a Bible, children’s drawings, Israeli songs, memories of a Holocaust survivor and the blue-and-white Israeli flag.