"It wouldn't be a one-way street," Paul said. "It would be a sale, not a grant."
According to The Associated Press, Israel receives about $3 billion a year in military aid.
Paul also suggested that Israelis would benefit from the increased autonomy that would come from receiving less military support from the United States.
"I don't think you need to call me on the phone to ask permission for what you want to do to stop missiles from raining down on you from Gaza," he said.
Paul is expected to meet Monday with Prime Minister Benjamin Netanyahu and President Shimon Peres. Later in the week, he will visit with Palestinian Authority President Mahmoud Abbas and King Abdullah of Jordan. It is Paul's first visit to Israel.
Paul was also asked about President Obama's nomination of former Sen. Chuck Hagel (R-Neb.) as secretary of Defense, but declined to comment. Paul was recently selected to the Senate Foreign Relations Committee.