Bashir al-Dabbash is the most senior member of the Palestinian resistance to be killed in Gaza since the assassination of Hamas leader Abd al-Aziz Rantisi. One other fighter was killed in the attack.
Supporters of Islamic Jihad in Gaza responded to al-Dabbash's killing with anger.
"Israel will soon see our reaction. Revenge will be painful and inside the depths of the Zionist entity," one local leader said at the morgue in Gaza.
Soon after al-Dabbash's assassination a helicopter missile killed two Palestinian resistance fighters and injured two as well as several civilians in the Jabalya refugee camp.
Late on Tuesday, at least three Palestinians were wounded by Israeli tank fire.
In southern Gaza, a Palestinian teenager on her way to school was killed by Israeli occupation forces as the onslaught on the territory entered the seventh day.
Iman al-Hams, 13, was shot from an Israeli army observation tower in the Tal al-Sultan neighbourhood of the town of Rafah, on the border with Egypt.
Her body was riddled with 20 bullets, including five in the head, doctor Ali Musa from the Rafah hospital said.
Al-Dabbash was killed in his car by
an Israeli missile
Helicopters fired a missile at a group of armed Palestinians believed to have been planting an explosive device, Aljazeera's correspondent said.
Adli Wafi, a member of al-Aqsa Martyrs Brigades, the military wing of the Fatah movement, was killed. Three others were injured.
A missile was also fired at another group of armed Palestinians, injuring seven, some seriously.
Aljazeera's correspondent said the humanitarian situation in the occupied territories was deteriorating as Israeli forces were demolishing houses, forcing residents out of their homes and opening fire on civilians.
Residents were also suffering a power shortage and drinking water and medical supplies were desperately needed, he said.
In the Shijaiya neighbourhood east of Gaza City, Israeli bulldozers razed vast areas of farmland.
Israel's raid into the Gaza Strip, which began last Tuesday, has already killed at least 68 Palestinians.
Earlier, chief Palestinian negotiator Saib Uraiqat denied the Palestinian Authority was holding negotiations with Israel in a bid to halt the Israeli invasion.
"The Israeli government should talk to the Palestinian Authority instead of destroying it"
Palestinian chief negotiator
"The Israeli government should talk to the Palestinian Authority instead of destroying it. It should realise that peace, security and stability will never be achieved unless through a fruitful, peaceful process that leads to ending the Israeli occupation," he told Aljazeera.
"Israel's current actions will lead to nothing but accelerating violence and chaos."