Videos purportedly showed resistance fighters inside a military base on Saturday, as bodies of dead soldiers lied on the ground.
At least 100 Israelis have been killed and over 900 injured, Israeli media reported, citing the Israeli ambulance service.
The Times of Israeli said Palestinian fighters infiltrated the town of Sderot and other settlements.
Hamas released a video showing its fighters had captured three Israelis.
“Scenes of Al-Qassam Brigades capturing a number of enemy soldiers in the battle of Al-Aqsa Flood,” said a sentence appearing on a black background at the start of the video.
Signs in Hebrew in the background suggested the footage was filmed on the Israeli side of the Erez crossing to the Gaza Strip. Other videos circulating on social media showed bodies of a number of people in military fatigues.
The unprecedented offensive started a few minutes before 7 a.m. as Israelis celebrated the last day of the weeklong Sukkot festival, with hundreds of rockets fired at Israel.
Videos showed young Israelis fleeing in panic when Palestinian fighters raided a music festival in the desert.
Red alert warning sirens were activated in Tel Aviv, Sde Boker, Arad, and Dimona in the south as explosions were heard by residents on Saturday. In al-Quds, rocket sirens sounded followed by the sound of explosions.
Cars were seen on fire after a rocket landed in Ashkelon, southern Israel.
Hamas’ armed wing said more than 7,000 rockets were fired from the Gaza Strip into Israel on Saturday, declaring it had started “Operation al-Aqsa Storm”.
“We decided to put an end to all the crimes of the occupation, their time for rampaging without being held accountable is over,” Hamas said.
Gaza-based Islamic Jihad said its fighters have joined the operation as Hamas called on Palestinians everywhere to fight and on resistance groups in Lebanon also to join the fighting against Israel.
“We are part of this battle, our fighters are side-by-side with their brothers in the Qassam Brigades until victory is achieved,” said Islamic Jihad armed wing spokesman Abu Hamza on
a post on Telegram.
“This storm which started from Gaza will spread to the West Bank and outside the country and all the places where our people and nation are present,” Hamas politburo chief Ismail Haniyeh said.
Haniyeh called the operation historic and epic, saying the main reason for its start was the “criminal aggression of the Zionists in al-Aqsa Mosque, which had reached its peak in recent days”.
Videos showed a bomb dropped from a quadcopter on a Merkava tank and later Palestinians pulling out a soldier from the vehicle.
A witness reporting from the scene is heard saying that the operators of the tank had been captured and taken to Gaza. One video purportedly shows an Israeli soldier being ridden pillion on a motorbike in the custody of two Palestinians and taken to Gaza.
Another video circulating on social media showed large black plumes of smoke and fires from a suspected impact site in Ashkelon.
In Gaza the roar of rocket launches could be heard and residents reported armed clashes along the separation fence with Israel, near the southern town of Khan Younis, and said they had seen significant movement of armed fighters.
Israel’s ambulance service said teams had been dispatched to areas in southern Israel near Gaza and residents were warned to stay inside.
Palestinians in Gaza expressed disbelief at the infiltration into the territories occupied by Israel. “It is like a dream. I still can’t believe it, fighters inside our occupied land?” said one Gaza shopkeeper, quoted by Reuters.
Senior Hamas military commander Mohammad Deif said, “This is the day of the greatest battle end the last occupation on earth.”
He said Palestinian resistance fighters struck numerous Israeli targets, including airports and military facilities.
“Today, the wrath of our nation and righteous fighters is boiling over. This is your day to make the enemy understand that its time has come to an end,” the top commander stated.
The operation came a day after Israel marked the 50th anniversary of the 1973 war that brought the entity to the verge of catastrophic defeat following a surprise attack by Syria and
“This attack too appeared to catch Israel completely by surprise,” the Times of Israel wrote.
Minister of military affairs Yoav Gallant rushed to Tel Aviv to consult with security chiefs. Hardline prime minister Benjamin Netanyahu was also to take part. The military said it was moving to a “state of war readiness” and Gallant authorized a widespread call-up of reserves.
Gallant also declared an emergency situation within a range of 80 kilometers from the Gaza Strip. The area includes the major cities Tel Aviv and Beersheba.
The military said it carried out at least two airstrikes on the Gaza Strip.
Palestinian journalist, hospital worker killed in Gaza
In the besieged Gaza, a Palestinian journalist was killed in an Israeli attack on the Gaza Strip, official news agency WAFA reported.
Mohammad Salhi was fatally shot while covering the events east of Bureij refugee camp in the central Gaza Strip, it added.
A Palestinian hospital worker was also killed in an Israeli shelling of a hospital in Beit Lahyia, north of the Gaza Strip.
Informed sources said at least one Israeli missile hit the Indonesian Hospital in Beit Lahiya, killing a worker and injuring others while causing damage to vital hospital equipment.
On Friday, Israeli military forces attacked hundreds of Palestinians attending the funeral procession of a young Palestinian man in the West Bank, injuring more than 50 people.
According to Palestinian media outlets, the crowd was mourning the 19-year-old Labib Dumaidi, who in the early hours of Friday succumbed to injuries sustained in a raid by Israeli settlers on the town of Huwara, south of Nablus.
Local sources said the Israeli forces attacked Palestinians with live bullets, rubber-coated metal bullets, stun grenades and tear gas to prevent them from continuing the procession.
The reports said 51 citizens were injured, including 19 citizens who were hit with rubber bullets, two of them in the head, and three who were hit with live bullets in the foot.