Israel vowed to make Iran "pay" for firing a barrage of missiles at its territory, with Tehran warning on Wednesday it would launch an even bigger attack if it is targeted.
Iran launched its second direct attack on Israel in history on Tuesday, firing what it said were 200 missiles including hypersonic weapons, and sending frightened Israeli civilians into shelters.
Israel, which put the number of missiles fired at its territory at 180, pounded Lebanese strongholds of Iran ally Hezbollah, with heavy strikes early Wednesday on south Beirut.
Israel shifted its focus last month from the war in Gaza, which was sparked by Hamas's 7 October attacks, to securing its northern border with Lebanon, where it is fighting Hezbollah.
After issuing numerous threats against Israel, Iran launched its second attack since April, sparking panic in Israel and around the region.
Israel intercepted most of Iran's missiles, while Israeli medics reported two people injured by shrapnel.
One of the missiles damaged a school building.
In the occupied West Bank, a Palestinian was killed in the city of Jericho "when pieces of a rocket fell from the sky and hit him", the city's governor Hussein Hamayel told AFP.
"Iran made a big mistake tonight and will pay for it," Israeli Prime Minister Benjamin Netanyahu said.
"Whoever attacks us, we attack them."
Defense Minister Yoav Gallant, who was at the command and control centre monitoring the interception of Iranian missiles, also vowed vengeance.
"Iran has not learned a simple lesson -- those who attack the state of Israel, pay a heavy price," he said in a statement.
Iran's Revolutionary Guards said the attack was in response to Israel's killing last week of Hezbollah chief Hassan Nasrallah, as well as the death of Hamas leader Ismail Haniyeh in a Tehran bombing in July widely blamed on Israel.
The attack also sought to avenge Israel's killing with Nasrallah of leading Iranian commander Abbas Nilforoushan of the Quds Force, the Revolutionary Guards' foreign operations arm.
The attack came after the Israeli military said troops had started "targeted ground raids" in south Lebanon, across Israel's northern border.
On Wednesday, Hezbollah said its fighters clashed with Israeli troops who tried to infiltrate into Lebanon.
The Lebanese army also said Israeli troops had staged two brief incursions before withdrawing shortly afterwards.
Also on Wednesday, the Israeli military announced it was bombarding Hezbollah targets in Beirut, with a Lebanese security source telling AFP that Israel had hit the city's southern suburbs repeatedly overnight.
AFP correspondents heard around 20 explosions coming from southern Beirut, and smoke billowed over the area.
The spike in violence in Lebanon since mid-September has killed more than 1,000 people and forced hundreds of thousands more to flee their homes.
President Joe Biden said the United States was "fully supportive" of Israel after the missile attack.
US Defense Secretary Lloyd Austin slammed an "outrageous act of aggression" by Iran, while Biden's National Security Advisor Jake Sullivan told reporters there would be "severe consequences".
Iranian state media reported 200 missiles had been fired at Israel including hypersonic weapons for the first time, which the Revolutionary Guards said had targeted "three military bases" around Tel Aviv and others elsewhere.
Iran's Foreign Minister Abbas Araghchi posted on social media platform X that Tehran's "action is concluded unless the Israeli regime decides to invite further retaliation".
Revolutionary Guards commander Major General Mohammad Bagheri also threatened to fire "with bigger intensity" if Israel makes good on its pledge to retaliate.
Iranian President Masoud Pezeshkian said his country had exercised its "legitimate rights" and dealt "a decisive response... to the Zionist regime's aggression".
Experts now project that the conflict can only escalate, with political analyst Jordan Barkin saying: "This will not end well."
"Netanyahu has a long history of fighting back strongly and quickly when provoked. Restraint is not Mr. Netanyahu's strong suit," he said.
James Demmin-De Lise, an author and analyst who writes a blog for The Times of Israel, agreed.
"I think we'll see Israel launch decisive attacks against Iran. Likely with the hope of toppling the Islamic regime," he said.
But some Israelis expressed fatigue with the war, with Tel Aviv resident Liron Yori, 22, saying: "I feel very, very disappointed. I see where the war's going and I don't I don't feel comfortable with it."
In central Beirut, people were also weary and afraid.
Youssef Amir, displaced from southern Lebanon, said: "I have lost my home and relatives in this war, but all of that is a sacrifice for Lebanon, for Hezbollah".
The Iran strikes prompted widespread condemnation as well as renewed calls for the escalation in violence to stop.
UN chief Antonio Guterres called to stem the "broadening conflict in the Middle East", renewing his calls for a ceasefire, though he stopped short of explicitly condemning Iran.
This prompted Israel to declare Guterres "persona non grata", as Foreign Minister Israel Katz said he did not "deserve to step foot on Israeli soil".
After issuing a similar call a day earlier, the Israeli military on Wednesday issued an expanded call for residents to evacuate over 20 areas in south Lebanon.
Lebanon's disaster management agency said 1,873 people have been killed since Israel and Hezbollah began trading cross-border fire after the Hamas attacks on Israel on 7 October 2023.
Hezbollah began low-intensity strikes on Israeli troops a day after its Palestinian ally Hamas staged its attack, which triggered Israel's devastating assault on Gaza.
Hamas's 7 October attack resulted in the deaths of 1,205 people in Israel, mostly civilians, according to an AFP tally based on Israeli official figures that include hostages killed in captivity.
Israel's retaliatory military offensive has killed at least 41,689 people in Gaza, the majority of them civilians, according to figures provided by the Hamas-run territory's health ministry. The UN has described the figures as reliable.
In Gaza, the civil defence agency said Israeli bombings killed 19 people on Tuesday.