The Israeli military has told people in Gaza it is resuming operations, saying Hamas broke a planned 72-hour ceasefire just hours after it had begun.
The army said it had warned residents to stay indoors.
Palestinian sources said at least 30 people had been killed in an Israeli attack in Gaza. Israel said it was in response to rocket fire from Hamas.
Some 1,460 Palestinians, mostly civilians, have died in the conflict and 63 Israelis, mostly soldiers.
The ceasefire had been brokered by the US and UN to give civilians a reprieve from the violence, and had been seen as an unforeseen breakthrough after days of diplomatic deadlock.
Palestinian and Israeli delegations have arrived in Cairo, Egypt, with the hope of negotiating a longer-term cessation of hostilities, but the fate of the talks now seems unclear.
The BBC’s Bethany Bell, in Jerusalem, says there had been enormous international pressure for a 72-hour lull to allow people in Gaza to bury their dead and restock with food.
During the morning life appeared to be returning to some kind of normality in Gaza, with many Palestinians heading towards heavily shelled areas to see if their homes were still intact.
But the Gaza health ministry reported that at least 30 Palestinians were killed and more injured in an Israeli attack near the southern town of Rafah after the ceasefire began.
Israeli military sources told the BBC the attack was in response to rocket fire on Kerem Shalom in Israel.