Tareq Abu Rajab, the overall head of the Palestinian Authority intelligence services, was with several of his bodyguards in a lift when an explosion ripped through the building in Gaza City on Saturday.
Palestinian security sources accused Hamas, the Islamist movement in government, of being behind what it said was an assassination attempt. Hamas called for calm and said that people should not jump to conclusions about what had happened.
Ali Abu Hassira, Abu Rajab's bodyguard and nephew, died of his wounds shortly after the explosion, and at least 15 other people were wounded in the blast and when shots were fired on the convoy transporting Abu Rajab to hospital.
Tawfiq Tirawi, the deputy intelligence services chief, told reporters in Ramallah that the locally manufactured bomb was placed under the floor of the lift.
"We have information that many groups are trying to target leaders of the Palestinian security forces as well as political leaders, including [Palestinian Authority] president Mahmoud Abbas," Tirawi said.
Abu Rajab underwent surgery at Shifa where doctors stopped the bleeding and stabilised him before taking him to a hospital inside Israel for further medical treatment.
Mourners cried for revenge
during the bodyguard's funeral
A spokesman at the Shifa hospital in Gaza City said: "Abu Rajab has been seriously injured, but his life was not in danger."
Israel's District Co-ordination Office said that Abu Rajab had been transferred to the Ichilov hospital after a "special request by the people of Mahmoud Abbas, the Palestinian leader".
Nabil Abu Rudeina, the Palestinian presidential spokesman, condemned the blast and called for an immediate inquiry into the bombing.
"The assassination attempt of the head of the Palestinian intelligence services chief Tareq Abu Rajab is a serious escalation and an attempt to undermine national security," Abu Rudeina said.
"President Abbas ordered an immediate investigation."
Ghazi Hamad said that "hasty accusations" should be avoided.
"There was an explosion in an elevator but so far we don't know if it's an assassination attempt. We have to wait and to know precisely what happened and what are the reasons for the explosion," he said.
"People should not make quick judgments and should listen to the voice of wisdom. We don't want to increase the tensions in the Palestinian street."
Said Siam, the interior minister in the Hamas government held an emergency meeting with members of the intelligence services after the explosion.
Abu Rajab, who was appointed by Abbas in April 2005, was seriously wounded in a drive-by shooting in Gaza City in 2004.
During the funeral of Abu Rajab's bodyguard shortly after the attack, hundreds of Fatah supporters fired into the air, shouted slogans against "traitors" and vowed to avange those killed.
In Ramallah, Palestinian gunmen from the Al Aqsa Martyrs Brigades, an offshoot of Abbas's Fatah movement, broke into the parliament compound in protest against the explosion in Gaza, which it blamed on Hamas.