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Senior Hamas leader Adnan al-Ghoul, second-in-command of the outfit and founder of its military wing, and his deputy were killed in an Israeli air strike in Gaza City on Thursday.
An Israeli aircraft fired two missiles at a car in which al-Ghoul and his deputy Imad Abbas were travelling.
The killing of the 46-year-old al-Ghoul, an expert bomb-maker and the brain behind the indigenous Qassam rockets, was the latest in a string of killings carried out by Israel.
In a statement, the Israeli army described him as a "leading Hamas figure" responsible for the deaths of dozens of Israelis.
He manufactured rockets that killed three people in recent months, masterminded at least two suicide bombings, and developed anti-tank and anti-aircraft weapons, the statement added.
Hamas confirmed the killings and vowed to take revenge.
"It's a new crime committed by the Zionist occupation government against one of the leaders of the Palestinian resistance. Hamas' retaliation will be painful and the Zionist enemy will regret this awful crime," Hamas spokesman Musher al-Masri said in a statement.
As the word of his death spread, thousands of angry Hamas supporters took to the streets in several refugee camps, calling for revenge and chanting anti-Israel slogans.