The head of the military wing of the Palestinian Islamist group Hamas has been killed during Israeli air and naval strikes in the Gaza Strip.
Ahmed Said Khalil al-Jabari and another Hamas official died when the car they were in was hit in Gaza City.
It follows a wave of rocket attacks against Israel from the territory.
Israeli Prime Minister Benjamin Netanyahu said the military was prepared to broaden its operation against Hamas targets in Gaza.
At least nine people had been killed in Gaza by the Israeli strikes and that number would probably rise, the Palestinian envoy to the United Nations, Riyad Mansou, told reporters in New York.
A number of injured civilians were seen being taken to hospital in Gaza City.
Neighbouring Egypt condemned the strikes, recalled its ambassador to Israel, summoned the Israeli ambassador in Cairo and called for a urgent meeting of the United Nations Security Council and the Arab League.
The BBC's Kevin Connolly, in Cairo, says Egypt's reaction to events in Gaza will be followed closely.
It is the first time violence has reached this pitch of intensity since the events of the Arab Spring brought to power a president drawn from the ranks of the Muslim Brotherhood, the same organisation in which Hamas has its roots.
Israel Defence Forces (IDF) spokeswoman Lt Col Avital Leibovich said Mr Jabari had "a lot of blood on his hands".
She told BBC News that "close to 20" sites in Gaza had been targeted in a "limited" operation, with the strikes aiming to destroy rocket-firing capabilities.
"The operation against Hamas, Islamic Jihad and other organisations has two goals: to protect Israeli civilians and target the terror capability of these organisations," she added.
On its Twitter feed, the Israeli military said 17 rockets fired from Gaza had been successfully intercepted by Israel's "Iron Dome" missile defence system on Wednesday, but one had got through and hit a "southern Israeli city".
This appeared to be a reference to Beersheba, where firefighters were seen extinguishing a burning car after a reported rocket strike.
It also claimed that Hamas's long-range missile capabilities and underground weapons storage facilities had been seriously damaged by Wednesday's strikes.
"Today we've sent a clear message to Hamas and to other terrorist organisations. And if there is a need, the Israeli Defense Forces are prepared to widen the operation. We will continue to do everything to defend our citizens," Mr Netanyahu said in a televised address.
'Israel will regret this'
Mr Jabari, who was 46, is the most senior Hamas official to be killed in the Gaza Strip since the major Israeli offensive four years ago.
Outside the hospital to which Mr Jabari's body was taken, thousands of angry Gaza residents chanted "retaliation" and "We want you to hit Tel Aviv tonight", according to the Associated Press news agency.
Hamas spokesman Abu Zuhri said: "Israel will regret the moment they even thought of doing this."
Palestinian Authority President Mahmoud Abbas, who is based in the separate West Bank territory, condemned the Israeli operation.
"President Mahmoud Abbas... warned of the seriousness of the Israeli escalation and demanded an immediate end to the aggression," a statement carried on the official Wafa news agency said.
Arab League foreign ministers will meet in emergency session on Friday.
UN Secretary General Ban Ki-moon called for an "immediate de-escalation of tensions".
The United States said it supported Israel's right to self-defence, and condemned militant rocket attacks on southern Israel.
State department spokesman Mark Toner added in a statement that "we encourage Israel to continue to take every effort to avoid civilian casualties".
The British Foreign Office issued a statement saying: "We continue to call on all sides to exercise restraint to prevent a dangerous escalation that would be in no-one's interests."
Israel has killed several senior Hamas figures in similar operations, including the movement's founder, Sheikh Ahmed Yassin, in 2004.