"How could he expect us to converse with a criminal, a killer, a man who does not abide by the law?" he asked.
Assad has spoken only on rare occasions since the uprising began, and Sunday's speech was his first since June. His last public comments came in an interview in November to Russian TV in which he vowed to "live and die" in Syria.
On Sunday, he seemed equally confident in the ability of his troops to crush the rebellion despite the recent fighting in Damascus.
"He did not come across as a leader under siege, nor as a leader whose regime is on the verge of collapse," said Fawaz A. Gerges, head of the Middle East Center at the London School of Economics.
"He seemed determined that any political settlement must come on his terms, linking those terms with the Syrian national interest as if they are inseparable," he said.
U.S. State Department spokeswoman Victoria Nuland said in a statement that Assad's speech was "yet another attempt by the regime to cling to power and does nothing to advance the Syrian people's goal of a political transition."
British Foreign Secretary William Hague called Assad's speech "beyond hypocritical." In a message posted on his official Twitter feed, Hague said "empty promises of reform fool no one."
European Union foreign policy chief Catherine Ashton's office said in a statement that the bloc will "look carefully if there is anything new in the speech, but we maintain our position that Assad has to step aside and allow for a political transition."
Foreign Minister Ahmet Davutoglu of Turkey said the speech was filled with "empty promises" and repetitive pledges of reform by a leader out of touch with the Syrian people.
"It seems (Assad) has shut himself in his room, and for months has read intelligence reports that are presented to him by those trying to win his favor," Davutoglu told reporters in the Aegean port city of Izmir on Sunday.
Turkey is a former ally of Damascus, and while Ankara first backed Assad after the uprising erupted, it turned against the regime after its violent crackdown on dissent.
Observers said the speech signaled the violence would continue indefinitely as long as both sides lacked the ability to score a victory on the battlefield.
Randa Slim, a research fellow at the New America Foundation in Washington, said Assad's made clear he has no intention of making way for a political transition.
"He sees himself rather as an orchestrator and arbiter of a process to be organized under his control," she said.
The Internet was cut in many parts of Damascus ahead of the address, apparently for security reasons, and some streets were closed.
At the end of his speech, loyalists shouted: "With our blood and souls we redeem you, Bashar!"
As he was leaving the hall, supporters pushed forward and swarmed around him to try to talk to him. Nervous security guards tried to push them away.
Many shouted "Shabiha forever!" — referring to the armed regime loyalists whom rebels have blamed for sectarian killings.
Amid the melee, Assad quickly shook hands with some of them and blew kisses to others.
AP writers Barbara Surk and Bassem Mroue in Beirut, Suzan Fraser in Ankara and APTN journalists in Turkey and Jordan contributed to this report.