The attacks, which killed a total of seven Palestinians, came hours after Prime Minister Ariel Sharon declared a "broad and nonstop" offensive against the Palestinian militant group.
Islamic Jihad claimed responsibility for Wednesday's bombing in the central Israeli town of Hadera, calling it revenge for Israel's killing of one of its West Bank leaders last week.
The escalating violence has all but dashed hopes for resumed peace efforts after Israel's withdrawal from the Gaza Strip and increased pressure on Palestinian leader Mahmoud Abbas to confront militants.
Mr Abbas has refused to crack down on armed groups such as Islamic Jihad, fearing civil war.
Israel launched its operation with four air strikes in Gaza early yesterday, targeting open fields used by militants to fire rockets, the army said.
In the afternoon, about 35 jeeps, backed by Apache helicopters, entered Jenin and troops surrounded the home of Abdel Khalim Izzadin. After a brief standoff, Izzadin and three other men surrendered, witnesses said.
Later last night, Israel fired missiles at the Jebaliya refugee camp near Gaza City as people were returning home from evening prayers. Witnesses said the target was a white Subaru car.
Shadi Mohanna, the Islamic Jihad field commander for northern Gaza, was killed along with his assistant, Mohammed Ghazaineh, according to Islamic Jihad.
Palestinian Health Ministry official Dr Moaiya Hassanain said seven people were killed the militants and five bystanders.