The National Security Council's counter-terrorism bureau raised the alert level for Sinai from an advisory to a warning after uncovering intelligence that a terrorist plot was in the works.
The new advisory called on Israelis to contact any friends or relatives vacationing in Sinai and advise them of the threat.
Sinai has been a popular getaway for Israelis, but The Jerusalem Post said security had deteriorated since the ouster of Egyptian president Hosni Mubarak last year. The unraveling has allowed extremists to get a foothold in the area and carry out kidnappings and pipeline bombings.
Haaretz said the new Egyptian government ramped up its counter-terrorism forces in Sinai two weeks ago at the same time Israeli officials were reporting a spike in the number of attacks against Israeli territory they had thwarted.