Hamas political leader Khaled Meshaal has told tens of thousands of people marking the 25th anniversary of the Palestinian Islamist group's founding that it will not recognise Israel.
In a fiery speech during his first ever visit to Gaza, he said Palestinians would not cede any part of their land.
Mr Meshaal's visit follows a ceasefire that ended days of violence between Israel and Hamas last month.
Israel described Mr Meshaal's speech as "hateful and extremist".
Government spokesman Mark Regev said Mr Meshaal's message "says no to peace and no to reconciliation, a message that says every Israeli man, woman and child is a legitimate target".
"That sort of extremism won't help peace, the opposite is true," he added.
Mr Meshaal is due to talk of reconciliation with Hamas's Palestinian rival, Fatah.
Hamas removed Fatah from Gaza by force in 2007 after winning elections there. Fatah governs parts of the West Bank.
'Made in Gaza'
The BBC's Yolande Knell in Gaza City says the event was intended to send a message that, after 25 years, Hamas is a force to be reckoned with.
It enjoys support in Gaza and feels it is gaining regional political influence after the Arab uprisings brought new Islamist governments to power, she adds.
Tens of thousands of Gazans made their way to the rally at the al-Qatiba complex west of Gaza City to hear the speech by Mr Meshaal.
"As long as Palestine is ours and Palestine is the land of Arabism and Islam, we can never recognise the legitimacy of Israel's occupation of it," he told supporters.
"There is no legitimacy for occupation. Hence, there is no legitimacy for Israel, however long time lasts."
The centrepiece of Saturday's rally in Gaza City was a huge replica of a type of rocket Hamas militants fired at Jerusalem and Tel Aviv in the conflict with Israel last month. It has Made in Gaza written on it.
Some 170 Palestinians and six Israelis were killed in the eight-day engagement and Hamas presented Saturday's event as a victory rally.
Ahmed Shaheen, attending the rally with his children, told Reuters: "This is a day of victory. The presence of Khaled Meshaal is a sign of this victory."
Huge portraits of Hamas founder Sheikh Ahmed Yassin and Ahmed Jabari, the military commander assassinated in an Israeli strike on 14 November, framed the stage.
Israel says its operation was successful in killing Jabari and significantly reducing the militants' stockpile of rockets.
Israel, the US and the EU consider Hamas a terrorist organisation.
In terms of the Hamas leadership, Mr Meshaal said in January he did not wish to stand again as political chief and the future make-up at the top remains unclear.
Mr Meshaal entered Gaza from Egypt at the Rafah border crossing on Friday, touching his head to the ground in celebration. The streets of Gaza City were decorated with Palestinian and Hamas flags.
Apart from a brief visit to the West Bank in 1975, Mr Meshaal had not visited the Palestinian territories since his family left in 1967.
He survived an Israeli assassination attempt in Jordan in 1997 only after King Hussein demanded an antidote to poison used by Israeli agents.
An Israeli official told the BBC that no guarantees for Mr Meshaal's safety in Gaza had been requested and none had been given.