Shaikh Ahmad Yasin was slightly injured following the attack on Saturday, Hamas spokesman Abd al-Aziz al-Rantissi told Aljazeera.
Seventeen people, mostly women and children, were wounded in the raid on a Palestinian apartment block in a densely populated area of Gaza City.
The wheelchair-bound Yasin, a co-founder of Hamas and its revered spiritual leader, has been treated at Shifa Hospital.
Shaikh Yasin was among several Hamas leaders holding a meeting at the home of senior Hamas official and Islamic University lecturer, Dr. Marwan Abu Ras, immediately before the strike.
Among them were high-ranking officials Mohammed Deff and Ismail Haniyeh.
Abu Ras said the missile - a quarter ton bomb dropped by a US supplied F-16 fighter jet - struck his home moments after Shaikh Yasin and Haniyeh evacuated the building after hearing the sound of aircraft overhead.
"We heard a loud noise and then everything went black and then red before my eyes," he told reporters while being treated in hospital for injuries to his chest and leg.
The Israeli army later confirmed it had attempted to liquidate Shaikh Yasin and warned that the Zionist state would pursue its "relentless war" against the Islamic movement.
"We warn Sharon that his head is now wanted by our troops"
"Israeli security forces acted this afternoon in Gaza in an Israeli airforce strike against a building in which the terrorist leadership of Hamas headed by Sheikh Yasin was meeting to plan future terrorist attacks against Israeli citizens," the army
"The IDF (Israeli army) will continue to wage a relentless war against Hamas and other terrorist organisations," it added.
Furious, Hamas threatened to assassinate Israeli Prime Minister Ariel Sharon after the attack.
"We warn Sharon that his head is now wanted by our troops," leaders of Hamas' military wing said via loudspeaker at the Shifa hospital.
The attack is the latest in a series of Israeli assassination attempts on leaders of Hamas. Shaikh Yasin is the most senior figure within the group to be targeted.
The missiles struck a densely
populated area of Gaza City
Emergency teams rushed to the scene of the blast but it was not immediately clear whether anyone has been killed or how many others have been injured.
Huge clouds of smoke have been billowing from the rubble of the building in a residential area of the Gaza Strip's main city.
It is the first time Israel has attempted to kill Hamas'
spiritual leader and founder. It has, however, assassinated scores of the radical group's leaders.
Since 21 August Israel has killed 11 Hamas members and four civilian bystanders in helicopter missile strikes in Gaza.
The attacks have ended a ceasefire called by Hamas and other resistance groups on 29 June, which Israel said it was not bound to observe.