Israel has carried out its biggest attack against Hamas militant targets in Gaza since the war in 2014, Prime Minister PM Benjamin Netanyahu says.
He said the raids were a response to rockets and mortars that had been fired into Israel from Gaza, and promised further attacks if necessary.
Palestinian health officials said two people were killed and 12 injured in an air strike in Gaza City.
Three Israelis were hurt by one of more than 90 rockets fired on Israel.
The Israel Defence Forces (IDF) said it had struck facilities used by Hamas, which dominates Gaza, including a battalion headquarters in Beit Lahia, a training camp located in a high-rise building in the al-Shati refugee camp in northern Gaza, weapons storage facilities and rocket launchers.
“In consultation with the minister of defence, the chief of staff and the top security command of the state of Israel, we have decided on strong action against Hamas terrorism,” Mr Netanyahu said in a video statement.
“The IDF have struck Hamas with the hardest blow since Operation Protective Edge and we will increase the strength of our attacks as necessary,” he added, referring to the 2014 conflict.
Witnesses told Reuters news agency an Israeli strike had hit an empty building in Gaza City and that the casualties were passers-by.
Hamas said another Palestinian had died after being shot by Israeli troops during border protests on Friday.
The IDF said dozens of rockets had been fired on Israel from within Gaza.
One rocket hit a home in the town of Sderot. Three people suffered shrapnel wounds.
The attacks come amid an escalation of violence in the region in recent months.
They coincided with mass demonstrations along the border which saw thousands of Palestinians express their support for the declared right of Palestinian refugees to return to their ancestral homes in what is now Israel – as well as demanding an end to the blockade of Gaza imposed by Israel and Egypt.
Israel and Egypt say the blockade is a necessary security measure against militants.
Gaza health officials say more than 130 Palestinians were killed and 15,000 others injured by Israeli forces during the protests.
Hamas does not recognise Israel’s right to exist but last year said it was ready to accept an interim Palestinian state limited to Gaza and the West Bank.
Israel deals ‘hardest blow’ to Hamas since 2014 Gaza war