"Israel will pay a high price for any attempt to hurt Sheikh Yasin or any other Hamas leader," the Izz al-Din al-Qassam Brigades, the armed wing of Hamas said in a statement on Saturday.
The strident Hamas rhetoric was in response to a recent remark by Israel's Deputy Defence Minister Zeev Boim that the elderly spiritual leader "deserved to die."
"We will make the Israeli Zionists drown in a sea of blood," the statement said.
Besides hinting Israel was contemplating a resumption of its policy to assassinate Hamas leaders, the Israeli deputy defence minister on Thursday had said Sheikh Yasin was a marked man.
"Sheikh Yasin is marked for death, and he should hide himself deep underground where he will not know the difference between day and night. And we will find him in the tunnels, and we will eliminate him," Boim said.
"We will make the Israeli Zionists drown in a sea of blood"
Izz al-Din al-Qassam Brigades
The Israeli military blames Shaikh Yasin for personally ordering Wednesday's bombing at the Gaza-Israel crossing point by a young Palestinian mother that killed four Israelis.
But amid the war of words, the United States has urged Israel to consider the consequences of its actions.
"While Israel does have the right to defend itself, we have also made clear it needs to consider the consequences of any actions it might be contemplating," US State Department spokesman Richard Boucher said.
Meanwhile, the Israeli army has announced it is lifting the general closure imposed on the Gaza Strip after Wednesday's explosion, allowing about 4000 Palestinians to return to jobs inside Israel.