The operation at Gaza City's Al-Shifa hospital brings to a head weeks of growing concern for the people trapped inside in grim conditions, and marks a key objective for Israel's campaign to destroy Hamas.
Dozens of Israeli soldiers, some wearing face masks and shooting in the air, ordered young men to surrender, a journalist in contact with AFP reported, as the army said it conducted a "precise and targeted" operation at the facility.
Youssef Abu Rish, an official from the Hamas-run health ministry who was in the hospital, told AFP he could see tanks inside the complex.
The Israeli army described it as "a precise and targeted operation against Hamas in a specified area" of the facility. The Palestinian militants have repeatedly denied concealing a base at the hospital.
The Red Cross and World Health Organization urged protection of civilians inside the facility, echoing warnings from key Israel ally Washington.
Israel said the raid was being executed based on "an operational necessity" but the West Bank-based Palestinian Authority denounced it as a "flagrant violation of international law."
The United Nations has said it estimates that at least 2,300 people -- patients, staff and displaced civilians -- are inside and may be unable to escape because of fierce fighting.
Witnesses have described conditions inside the hospital as horrific, with medical procedures taking place without anaesthetic, families with scant food or water living in corridors and the stench of decomposing corpses filling the air.
The army said it had delivered incubators, baby food and medical supplies to the hospital during the operation.
Prime Minister Benjamin Netanyahu has vowed to destroy Hamas in response to its attacks on October 7, which killed an estimated 1,200 people, mostly civilians, and saw 240 hostages taken to Gaza.
The Hamas-run health ministry in Gaza says Israel's ensuing aerial bombardment and ground offensive have killed 11,320 people, mostly civilians, including thousands of children.
Fear for civilians
International concern over the fate of the people inside the hospital has been steadily increasing, especially as the civilian toll in Gaza has climbed during the war.
"The protection of newborns, patients, medical staff and all civilians must override all other concerns," UN humanitarian chief Martin Griffiths said on X, formerly Twitter. "Hospitals are not battlegrounds."
The White House reiterated its concerns for the safety of civilians shortly after the raid began.
"We do not support striking a hospital from the air and we don't want to see a firefight in a hospital," a National Security Council spokesperson said.
Earlier, the White House had said that US intelligence sources corroborated Israel's claim that Hamas and another Palestinian militant group, Islamic Jihad, had buried an operational "command and control node" under Al-Shifa.
Hamas, which has repeatedly denied the claims, said US President Joe Biden was "wholly responsible" for the assault, accusing his administration of giving Israel "the green light... to commit more massacres against civilians."
Citing the Hamas-run health ministry, UN humanitarian agency OCHA said 40 patients had died in Al-Shifa on Tuesday, while hospital director Abu Salmiya said 179 bodies had been interred in a mass grave inside the complex.
'We could see flames'
The situation in Gaza's other hospitals is also dire, with the World Health Organization saying 22 of 36 are not functional due to a lack of generator fuel, damage or combat.
Patients, the wounded, their families, and the medical teams trapped in Al Quds hospital were evacuated Tuesday, said the Palestinian Red Crescent, adding the facility had been under "siege" for 10 days.
The head of the UN children's agency described Wednesday the "devastating" scenes she witnessed during a visit to Gaza, urging the parties to the conflict to "stop this horror."
The humanitarian crisis also includes 1.5 million people who, according to the UN, have fled southwards after Israel told them to leave the northern half of the territory.
Even though Gazans have been urged to flee south, strikes there have steadily claimed lives and destroyed homes
"All of a sudden, all we could see was flames. We were all buried under the rubble, no one could see anyone else," said Ali Abu Jazar, who survived a strike in Rafah, in the far south of Gaza.
"We started yelling to let them know 'we're here, underneath you,' so they began clearing the rubble to rescue us," he added.
A trickle of aid has made it into the besieged territory in the five weeks of war, and crucially fuel for generators has been in short supply.
A fuel truck entered Gaza through the Rafah border crossing from Egypt Wednesday, state-aligned Al Qahera News reported, in the first such delivery since the Israel-Hamas war began on October 7.
An Egyptian source said the fuel would be delivered to the United Nations "to facilitate the delivery of aid after trucks on the Palestinian side stopped operating for lack of fuel."
Israeli leaders have so far rejected calls for a ceasefire in the five-week-old war until hostages are released.
Abu Obeida, spokesman for Hamas's military wing, said Monday that Israel had asked for the release of 100 hostages, while the militants want 200 Palestinian children and 75 women freed from Israeli prisons.
Qatari foreign ministry spokesman Majed bin Mohammed Al-Ansari, who is helping oversee talks on a hostage deal, said the "deteriorating" situation in Gaza was hampering efforts to find agreement.
With pressure building on the Israeli government, Netanyahu said he was "working relentlessly" to get the hostages out.
Relatives of the hostages set out Tuesday on a five-day protest march from Tel Aviv to the prime minister's office in Jerusalem to call for the captives' release, the Hostages and Missing Families Forum said.
The group later demanded the government "approve a deal tonight to bring home all hostages from Gaza."