Islamic Jihad’s armed wing announced the death in a statement, after Israel confirmed it had targeted Baha Abu Al-Ata, 42, in a strike. The group said Ata’s wife was also killed.
Israel blamed Ata for recent rocket fire into its territory and said he was preparing further attacks.
The strike led to sporadic rocket fire from the Gaza Strip toward Israel, Gaza residents reported, but it was unclear if it resulted in damage or injuries.
Air raid sirens rang out in parts of southern Israel near Gaza.
“A building in the Gaza Strip, in which the Palestinian Islamic Jihad senior leader Baha Abu Al-Ata stayed in, was attacked,” Israel’s military said in a statement, calling it a joint operation between the army and Israel’s Shin Bet domestic security service.
Damage from a blast could be seen at Ata’s home in the Shejayia district in the east of Gaza City. Mosque loudspeakers were also announcing his death.
Hamas threatens revenge
Israel said Ata was behind rocket fire toward a music festival in the Israeli city of Sderot in August as well as further rocket attacks at the start of November.
It has also blamed him for being behind sniper fire and drone launchings.
Ata “is responsible for most of the terror attacks in the last year from the Gaza Strip,” the army said, describing him as a “ticking bomb”.
It alleged he “was promoting preparations to commit immediate terror attacks in various ways towards Israeli civilians and (Israeli) troops during the recent few days.”
The strike raised the possibility of a severe escalation between Israel and Palestinian militants in Gaza, which is ruled by Islamist movement Hamas.
Three wars have been fought between them since 2008.
Islamic Jihad is the second most-powerful militant group in the Gaza Strip behind Hamas, to which it is allied.
Hamas in a statement threatened revenge on Israel after the strike.
Israel’s military said it had “deployed troops and is prepared for a wide range of offensive and defensive scenarios.”