Off the back of netting two late goals to defeat Senegal in their opening Group A fixture, Oranje faced Ecuador on Friday knowing that a victory would secure their place in the last 16.
Netherlands appeared on track to progress with a game to spare when Cody Gakpo scored one of the goals of the tournament from distance during the early stages.
However, the three-time runners-up failed to build on their advantage and Ecuador looked the more threatening of the two nations from the half-hour mark onwards.
The South American deservedly found an equaliser from Enner Valencia in the second half to earn a 1-1 draw, and it could have been worse for Netherlands after their opponents struck the woodwork through Gonzalo Plata.
As it stands, Netherlands sit at the top of the group and are likely to progress as winners if they can defeat tournament hosts Qatar on Tuesday.
Nevertheless, Van Gaal has been left unimpressed by the level of his team's performances, claiming that they cannot expect to challenge for the Jules Rimet trophy without upping the standard of their displays.
Speaking to reporters, as quoted by The Mirror, Van Gaal said: "If you want to become world champions, we need to improve a lot, because the quality of the opponents we have yet to face is at a much higher level.
"We didn't play a good match. We didn't play well in terms of ball possession and that's our problem. Also, all the second balls, all the duels, were won by Ecuador.
"If that happens, then you cannot win. I was satisfied that we drew 1-1 but I was not satisfied with the game."
On a positive note for Netherlands, they are now unbeaten in 15 group-stage fixtures, moving them one adrift of the all-time World Cup record held by Germany and Brazil.