Israel unleashed a wave of airstrikes in Gaza on Friday (local time), killing at least 10 people, including a senior militant, and wounding dozens, according to Palestinian officials.
Israel said it was targeting the Islamic Jihad militant group in response to an "imminent threat" following the arrest of another senior militant in the occupied West Bank earlier this week.
Palestinian militants launched a barrage of rockets hours later as air raid sirens wailed in central and southern Israel, pushing the sides closer to all-out war. Islamic Jihad claimed to have fired 100 rockets.
Israel and Gaza's militant Hamas rulers have fought four wars and several smaller battles over the last 15 years at a staggering cost to the territory's 2 million Palestinian residents.
A blast was heard in Gaza City, where smoke poured out of the seventh floor of a tall building on Friday afternoon (local time). Video released by the military showed strikes blowing up three guard towers with suspected militants in them.
In a nationally televised speech, Israeli Prime Minister Yair Lapid said his country had launched the attacks based on "concrete threats".
"This government has a zero-tolerance policy for any attempted attacks - of any kind - from Gaza towards Israeli territory," Lapid said.
"Israel will not sit idly by when there are those who are trying to harm its civilians."
He also added that "Israel isn't interested in a broader conflict in Gaza, but will not shy away from one either".
The violence poses an early test for Lapid, who assumed the role of caretaker prime minister ahead of elections in November in which he hopes to keep the position. He has experience in diplomacy, having served as foreign minister in the outgoing government, but his security credentials are thin.
Hamas also faces a dilemma in deciding whether to join a new battle - barely a year after the last war caused widespread devastation. There has been almost no reconstruction since then, and the isolated coastal territory is mired in poverty, with unemployment hovering around 50%.
The Palestinian Health Ministry said a 5-year-old girl and a 23-year-old woman were among those killed and that another 55 people were wounded. It did not differentiate between civilians and militants.
The Israeli military said early estimates were that around 15 fighters were killed.
Islamic Jihad said Taiseer al-Jabari, its commander for northern Gaza, was among those killed. He had succeeded another militant killed in an airstrike in 2019.
Hundreds marched in a funeral procession for him and others who were killed, with many of the mourners waving Palestinian flags and Islamic Jihad banners as they called for revenge.
Israeli media showed the skies above southern and central Israel lighting up with rockets and interceptors from Israel's Iron Dome missile defence system. An explosion was heard in Tel Aviv. It wasn't immediately clear how many rockets were launched and there was no immediate word on any casualties on the Israeli side.
Israel continued to strike other targets on Friday (local time), including weapons production facilities and Islamic Jihad positions.
An Israeli military spokesman said it launched the strikes in response to an "imminent threat" from two militant squads armed with anti-tank missiles. The spokesman, who briefed reporters on the condition of anonymity, said al-Jabari was deliberately targeted and had been responsible for "multiple attacks" on Israel.
Defense Minister Benny Gantz meanwhile approved an order to call up 25,000 reserve soldiers if needed. And the military announced a "special situation" on the home front, with schools closed and limits placed on other activities in communities within 80 kilometres of the border.
Israel had closed roads around Gaza earlier this week and sent reinforcements to the border as it braced for a revenge attack after Monday's arrest of Bassam al-Saadi, an Islamic Jihad leader, in a military raid in the occupied West Bank. A teenage member of the group was killed in a gun battle between the Israeli troops and Palestinian militants.
Israel and the Hamas fought four wars since the militant group seized power in the coastal strip from rival Palestinian forces in 2007. The most recent was in May 2021, and tensions again soared earlier this year following a wave of attacks inside Israel, near-daily military operations in the West Bank and tensions at a flashpoint Jerusalem holy site.
Islamic Jihad leader Ziad al-Nakhalah, speaking to the al-Mayadeen TV network from Iran, said "the fighters of the Palestinian resistance have to stand together to confront this aggression". He said there would be "no red lines" and blamed the violence on Israel.
Hamas spokesman Fawzi Barhoum said "the Israeli enemy, who started the escalation against Gaza and committed a new crime, must pay the price and bear full responsibility for it".
Islamic Jihad is smaller than Hamas but largely shares its ideology. Both groups are opposed to Israel's existence and have carried out scores of deadly attacks over the years, including the firing of rockets into Israel. It's unclear how much control Hamas has over Islamic Jihad, and Israel holds Hamas responsible for all attacks emanating from Gaza.
Israel and Egypt have maintained a tight blockade over the territory since the Hamas takeover. Israel says the closure is needed to prevent Hamas from building up its military capabilities, while critics say the policy amounts to collective punishment.