Mahmoud Abbas, the Palestinian president, snapped contacts with Israel in protest against latter's military offensive in the Gaza Strip.
Addressing a joint press conference later with the Egyptian foreign minister, Rice called for an immediate halt to rocket attacks on Israel.
"The rocket attacks against innocent civilians in their cities... it needs to stop. No Israeli government can tolerate that," she said.
She also expressed her concern about the humanitarian situation in the Gaza Strip and said she had impressed upon Israel the need to be aware of the "effects of its operations against innocent people".
Rice has since arrived in Israel. She will also travel to the West Bank.
Israel pulled back its troops from the Gaza Strip ahead of the visit by Rice.
But Gaza's residents remain wary of further attacks after a senior Israeli official said that the pull-back would only be a "two-day interval" during her visit.
Israeli air raids continued late on Monday as troops and tanks left the territory.
Two Palestinians were killed in the raids which came after six days of attacks that left 120 Palestinians dead.
Al Jazeera's Jacky Rowland, reporting from Gaza, said Rice's regular but inconclusive visits were starting to lose weight with Palestinian citizens.
Abbas suspended on Sunday contact with Israel in light of the aggression against the Gaza Strip.
But by Monday he appeared willing to mediate a deal between Israel and his political rivals in Hamas, which control the strip.
A statement from his office on Monday said the Fatah leader was "willing to work for the conclusion of a total truce with the Israeli side to spare our people more victims and suffering".
A Hamas leader in Gaza confirmed to Al Jazeera that the group had received approaches from Fatah, but said Hamas "has not reached a decision yet and no direct talks with Abu Mazen [Abbas] have yet ensued".
Despite calling an end to the operation Ehud Olmert, the Israeli prime minister, said Israel would be taking further action in Gaza unless cross-border rocket fire was cut significantly.
"We are not willing to show tolerance, period. We will respond," Olmert said.
Rowland also reported that Gazans were "very anxious indeed".
"They are hearing the talk in Israel about this being merely the first stage of the operation and they are wondering: if this was the first stage, what on earth can they be likely to face during any second phase."
Speaking after the pullout, Saeb Erekat, a senior Palestinian negotiator, said the US-backed talks, which Washington hopes can result in a statehood deal this year, would remain frozen for now.
"We are working hard to reach a full calm, a full cessation of hostilities. We want to make sure that what happened will not recur," Erekat said.
Salam Fayyad, the Palestinian prime minister, said the talks with Rice would focus on events in Gaza and that Palestinian leaders would urge her to press Israel to end its military operations there.
Hamas, which has controlled the Gaza Strip since June, declared victory after the Israeli withdrawal on Monday and in Gaza City, several thousand Hamas supporters took to the streets in celebration.
Dozens of children were killed in the recent attacks on Gaza, which included a string of air raids in and around the territory.
The Israeli rights organisation B'Tselem on Monday contradicted official claims that most of the Palestinians killed were fighters.
"Contrary to the [Israeli] chief of staff's contention that 90 per cent were armed, at least 54 of the dead - 25 of them minors - did not take part in the hostilities," the rights group said in a statement on its website.