The assault, which Israel called Operation: Pillars of Defense, included airstrikes on 20 underground bunkers housing long-range launchers capable of striking Tel Aviv, as well as naval attacks on other targets in Gaza.
Hamas returned fire, launching dozens of rockets at southern Israel. Hamas spokesman Fawzi Barhoum said Israel "committed a dangerous crime and broke all red lines," and that Israel "will regret and pay a high price" for the assault.
Israeli civil-defense officials cautioned the public to prepare for retaliatory rocket attacks from Gaza, The New York Times reported.
Israeli Prime Minister Binyamin Netanyahu said on Israeli television the operation was necessary to put an end to rocket attacks on southern Israel.
Egyptian President Mohamed Morsi ordered Egypt's ambassador to Israel to return to Cairo and summoned the Israeli ambassador to lodge a formal protest of the assault, the Times reported. Morsi called for the U.N. Security Council and the Arab League to hold emergency meetings, the newspaper said.
U.S. President Barack Obama spoke with Netanyahu and Morsi Wednesday, the White House said in a statement.
Obama reiterated U.S. support for Israel's right to self-defense and urged Netanyahu to "make every effort to avoid civilian casualties." The leaders said Hamas must stop its attacks for the situation to de-escalate.
Obama restated the same points in his conversation with Morsi and agreed to stay in close touch given Egypt's central role in preserving security in the region.
Israeli Defense Minister Ehud Barak said Israel does not want war but its military is prepared to enter Gaza.
Hamas confirmed Ahmed al-Jabari -- the commander of its military wing, the al-Qassam Brigades -- was killed Wednesday. Hamas said an Israeli missile hit the car in which al-Jabari was riding, the Palestinian Ma'an News Agency reported.
The Israeli intelligence agency Shin Bet said the strike was justified by al-Jabari's "decade-long terrorist activity."
"The purpose of this operation was to severely impair the command and control chain of the Hamas leadership, as well as its terrorist infrastructure," Israeli military sources told Ma'an.
The attack ended an apparent truce negotiated by Egypt. Israeli Brig. Gen. Yoav Mordechai said the country should be prepared for "protracted" conflict in the south as the military said it had rockets aimed at Hamas sites.
Militant Palestinian groups in Gaza reacted angrily.
"Cowardly settlers had better flee to shelters where we will bury them and they will never be able to leave," Abu Mujahid, a spokesman for the Popular Resistance Committees, told Ma'an. "The occupation has started the battle and we will respond very fiercely to their crimes."