The escalation began in the late afternoon, when an Israeli soldier died after being hit by gunfire during protests at the Israeli-Gaza fence, Israeli Defense Forces (IDF) said
It was the first Israeli soldier killed at the fence since the last war between Israel and Hamas in 2014, the IDF said.
IDF's first response was tank and artillery fire.
According to the Palestinian Ministry of Health, four people were killed in this salvo.
Hamas, the militant group leading the coastal enclave, said in a WhatsApp message Journalists that three of the four men killed were members of his armed Qassam brigades.
The IDF said that in addition to the shooting events, several explosives were thrown at Israeli soldiers during the riots on the fence.
The Israeli Air Force then launched a series of what it called large-scale attacks on dozens of Hamas military targets throughout the coastal enclave.
The IDF said it had succeeded in eliminating the command and control capabilities of a Hamas battalion, a drone camp, air defense systems and a de facto system. Among the other attacks on the underground infrastructure, which were attacked by other sources.
Later on Friday, the army said at least three missiles had been fired from Gaza at Israel; two of the launches were intercepted by the Iron Dome air defense system.
There were no reports of missile strike losses.
Nickolay Mladenov, head of the United Nations Middle East envoy, urged the two sides to step back from further escalation.
"Everyone in Gaza must move away from the edge, not next week, not tomorrow, right NOW! Those who want to provoke Palestinians and Israelis into another war must succeed," he tweeted.
Israeli Defense Minister Avigdor Liberman told Mladenov in a telephone conversation that if Hamas continues to fire rockets against Israel, the answer will be "much stronger" than they believe, according to a statement from Liberman's office ,
"Responsibility for the destruction and loss of life will be Hamas," Liberman said.
Hamas spokesman Fawzi Barhoum said in a statement, "Attack will be attacked and our people will continue until they get their rights and end the blockade because they have the right to live freely."
As Friday night began, reports began to emerge that Egypt and the Mladenov led the United Nations leading mediation efforts between the two sides.
And just after midnight local time (17:00 ET Friday), Hamas and a diplomatic source with direct knowledge of the talks, CNN said the ceasefire had been restored.
"Egyptian and international efforts have led to a return to the former state of calm between the occupation [a reference to Israel] and the Palestinian factions," Hamas spokesman Fawzi Barhoum told CNN.
There was no immediate Israeli response to reports
It is the second time in six days that Egypt has negotiated a ceasefire for Gaza after a severe escalation of violence.
Last Saturday, Israel Gaza struck dozens of air strikes after the IDF said militants fired more
One day after this ceasefire, Israeli Prime Minister Benjamin Netanyahu announced in his weekly Cabinet meeting that Israel would never close a ceasefire, who did not consider the arson attacks from Gaza with dragons and balloons
For months the tension on the fence has been seething, sometimes breaking out into violence. In recent weeks, the number of arson attacks has also risen sharply, a threat to the low-tech industry, for which Israel struggled to find an answer.
Violence has also hampered international efforts to alleviate the living conditions of two million people Gaza
Israel has maintained a land, sea and air blockade on the coastal enclave since June 2007, when Hamas took over Gaza
The Blockade effectively blocks the more than 2 million inhabitants of Gaza in the territory and is made by the United Nations make a significant contribution to the deterioration of local living conditions. Israel says it is a necessary security measure.
Ibrahim Dahman, Ameera Ahmad and Ian Lee in Gaza and Oren Lieberman in Jerusalem contributed to this report.