Dozens of Israelis were killed and over 1,000 injured, according to Israeli media, after Hamas launched a massive operation from the Gaza Strip against Israel early on Saturday.
The Palestinian health ministry also reported that 198 Palestinians had been killed and 1,610 injured in Israeli strikes on Gaza.
Rockets streamed across the sky repeatedly after the first launches from multiple locations across Gaza at 06:30 am (0330 GMT).
The Israeli army warned of sirens across the country's south and central areas, urging the public to stay near bomb shelters.
Hamas said: "We decided to put an end to all the crimes of the occupation (Israel), their time for rampaging without being held accountable is over."
It added: "We announce Operation Al-Aqsa Flood and we fired, in the first strike of 20 minutes, more than 5,000 rockets."
The office of Israeli Prime Minister Benjamin Netanyahu said the premier will shortly convene security chiefs over the violence.
Israel has imposed a crippling blockade on Gaza since 2007 after Hamas took power. The enclave is home to 2.3 million Palestinians.