Dozens of gunmen from the Islamist militant group Hamas appear to have entered southern Israel in a surprise attack and are currently at large.
Israel’s military says it is striking targets in the Gaza Strip amid a “situational assessment”.
Earlier, dozens of rockets were launched toward Israel, setting off air raid sirens across the country.
One person has been killed and there have been reports of explosions near Tel Aviv and areas surrounding Gaza.
Palestinian militant group Hamas has claimed responsibility for the attack, with its armed wing saying it launched 5,000 rockets in 20 minutes.
Israel’s Defense Forces (IDF) said the group “had begun a massive shooting of rockets from the Gaza Strip into Israeli territory” and that militants had entered Israeli territory in “different locations”.
The statement said the chief of the general staff was conducting a “situational assessment” and that Hamas would “face the consequences and responsibility for these events”.
It added that residents in the area surrounding the Gaza Strip have been asked to stay inside, while civilians in southern and central areas are “required to stay next to shelters”.
Israel’s Magen David Adom rescue agency said one person had died with 15 others injured.