Blasts rocked different areas of Gaza early on Friday as Israel said its jets hit targets including tunnels and weapons manufacturing sites of Hamas, which controls the blockaded southern coastal strip.
As daybreak neared, the military said it had also struck Hamas targets in southern Lebanon, where residents around the area of the Rashidiyeh refugee camp reported three loud blasts.
The strikes came in response to rocket attacks from Lebanon towards northern Israeli areas, which Israeli officials blamed on Hamas.
The military said 34 rockets were launched from Lebanon, of which 25 were intercepted by air defence systems. It was the biggest such attack since 2006, when Israel fought a war with the heavily armed Hezbollah movement.
"Israel's response, tonight and later, will exact a significant price from our enemies," Prime Minister Benjamin Netanyahu said following a security cabinet meeting.
As the Israeli jets struck in Gaza, salvos of rockets were fired in response and sirens sounded in Israeli towns and cities in bordering areas, however there were no reports of serious casualties.
The cross-border strikes came amid an escalating confrontation over Israeli police raids at the Al-Aqsa mosque compound in Jerusalem during the Muslim holy month of Ramadan, which this year coincides with the Jewish Passover holiday.
"We hold the Zionist occupation fully responsible for the grave escalation and the flagrant aggression against the Gaza Strip and for the consequences that will bring onto the region," Hamas said in a statement.
Although Israel blamed Hamas for Thursday's attack, which took place as Hamas head Ismail Haniyeh was visiting Lebanon, security experts said Hezbollah, the powerful Shi'ite group that helps Israel's main enemy Iran project its power across the region, must have given its permission.
Lebanese Prime Minister Najib Mikati condemned any military operations from its territory that threatened stability. There was no immediate comment from Hezbollah.
Palestinian factions in Lebanon have fired sporadically on Israel in the past, but the border area has been largely quiet since the 2006 war with Hezbollah.
The US State Department condemned the launch of rockets from Lebanon and earlier strikes from Gaza, and said Israel had the right to defend itself.
But it also expressed concern at the scenes in the Al-Aqsa mosque, where Israeli police were filmed beating worshippers during raids that officials said were to dislodge groups of young men who had barricaded themselves inside the mosque.
The Al-Aqsa compound in Jerusalem's Old City is Islam's third holiest site, hundreds of thousands pray during Ramadan. Known to Jews as Temple Mount, it is also Judaism's most sacred site, although non-Muslims are not allowed to pray there.
It has long been a flashpoint for tensions. Clashes there in 2021 helped to trigger a 10-day war between Israel and Gaza.
There has been widespread anger among Palestinians in the occupied West Bank and Gaza over the police actions as well as condemnation from across the Arab world.
Late on Thursday, police said there were also disturbances in a number of Arab cities in Israel itself, including Umm el-Fahem, Sakhnin and Nazareth.
The security situation adds a further complication for Netanyahu's religious-nationalist government, which has faced mass protests over its now-suspended plans to curb the powers of the Supreme Court.
However, opposition leader Yair Lapid said the government could count on cross-party support following the rocket attack and Netanyahu said Israelis stood behind the security forces.
"The internal debate in Israel will not prevent us from taking action against them wherever and whenever necessary. All of us, without exception, are united on this," Netanyahu said.
