A number of rockets have been fired at Jerusalem and the surrounding area, says Israel’s military.
It came minutes after an ultimatum from Hamas for Israel to withdraw forces from two flashpoints in the city.
The group claimed responsibility for the attack, calling it retaliation for Israeli “crimes and aggression”.
Israel carried out a missile strike in northern Gaza in response, causing injuries, according to Palestinian media.
Seven rockets had set off sirens in Jerusalem and the surrounding area and rocket fire from Gaza was continuing, said Israel’s military.
A civilian car was hit and one person injured by one of the rockets, it added.
Sky’s Mark Stone, in Jerusalem, said he understood a number of rockets were fired at an area 10-15km west of the city.
He said Israel’s Iron Dome defence system is believed to have destroyed most, but that a few landed, in what he called a “very significant development”.
Stone said the attack was almost certain to mean a “heavy night of bombardment” on Hamas base the Gaza Strip this evening.
It comes as clashes in Jerusalem between Palestinians and Israeli forces reportedly injured more than 300 people.
Police fired stun grenades and tear gas inside the Old City’s Al Aqsa Mosque during the violence this morning.
Israeli authorities said “extremists” had thrown stones and other objects at officers, and onto a road near the Western Wall where thousands of people had gathered to pray.