On Monday night, nine civilians, including three girls, were killed in Beit Hanoun, North Gaza, according to the Gaza Health Ministry.
The deaths were confirmed after explosions were heard in Jerusalem just after 6 p.m. local time on Monday evening.
The Israeli army said Hamas had launched a barrage of rockets into Israel and that its forces were ready to respond.
Hamas, Gaza's ruling armed group, had previously delivered an ultimatum to Israel.
Israel usually responds to rocket fire in Gaza with airstrikes and artillery fire, but there was no official comment from the Israeli army on the civilian deaths.
Images shared on social media showed lines of white smoke in the sky near the Israeli border, but the video could not be checked right away.
"Seven rockets were fired from the Gaza Strip at Israeli territory, following the previous news about the sirens that sounded in the cities of Beit Shemesh and Jerusalem. The Iron Dome Aerial Defense System intercepted one of the missiles, according to an Israeli army statement.
Anti-tank missiles were also fired over the Gaza border, according to the Israeli army.
Palestinian Islamic Jihad also claimed to have fired a missile barrage into Israel, shortly after the Israeli military put several Israeli towns on "Red Alert."
The Knesset has been evacuated.
As the sirens rang, Israel's legislative assembly, the Knesset, was evacuated, a moment caught on the parliament's TV feed.
As tensions with Palestinians in Jerusalem rise, the Israeli military announced on Monday that it was suspending a major exercise for a day to concentrate on preparing for a potential escalation of conflict.
On Sunday, Israel's armed forces started their largest training exercise in 30 years, codenamed "Chariots of Fire."
However, after conducting a strategic review, Chief of Staff Lt Gen Aviv Kohavi decided to call off the exercise for the day, instructing forces to "focus all resources on preparations and readiness for escalation scenarios," according to the military.
In Gaza, a Hamas spokesman said the leadership of the Palestinian enclave's joint command of armed movements had given Israel "until 6 p.m. an ultimatum to withdraw its security forces from Jerusalem's Al Aqsa Mosque compound and the city's Sheikh Jarrah neighborhood."
Earlier in the day, hundreds of Palestinians clashed with Israeli police at Al Aqsa, and many Palestinian families face eviction from homes in Sheikh Jarrah claimed by Jewish settlers, escalating tensions in Jerusalem.
