Eighteen Palestinians were killed and 40 wounded when an Israeli tank fired on the northern Gaza town of Beit Hanoun.
Women and children were among those killed and injured in the attack.
Palestinian hospital officials said 13 of the dead belonged to the same family.
Palestinian Prime Minister, Hamas's Ismail Haniya, called it an "awful massacre" and announced three days of national mourning.
Israel has ordered the army to halt artillery attacks while an inquiry into the shelling is carried out.
There was anger and despair in the streets of Beit Hanoun, where some 80 have died since the beginning of this month.
Meanwhile, Palestinian women took to the streets of Jabalia in protest at the attack.
There were also protests in the West Bank city of Bethlehem against the Israeli offensive.