Israel's military said it would act to curb rocket fire in the area.
The health ministry in Hamas-run Gaza said Monday that an Israeli operation in Khan Yunis killed 70 people and wounded more than 200, after the military warned it would "forcefully operate" in the area.
The military warning affected the eastern Khan Yunis sector of the Al-Mawasi humanitarian zone in southern Gaza and sent thousands of Palestinians fleeing.
Israel's military said it would act to curb rocket fire in the area. Khan Yunis had already seen heavy fighting earlier this year.
The latest incident comes nine days after the health ministry said 92 people were killed in a strike on Al-Mawasi, when Israel said it was targeting Hamas's commander.
Israel has vowed to destroy Hamas and has launched intense military operations in areas of Gaza that it previously had declared free of the militants.
Israeli Prime Minister Benjamin Netanyahu, under pressure to reach a truce and hostage-release deal, was on his way to Washington to address the US Congress.
Netanyahu will meet US President Joe Biden, who has pushed him to agree to a ceasefire, more than nine months into the Gaza war ignited by the Palestinian militant group's October 7 attacks on Israel.
In late June, Netanyahu had said the war "in its intense phase" was about to end.
- 'Enough!' -
The evacuation order for the Al-Mawasi area came just two months after the military directed Palestinians there for their own safety.
"Due to the Israeli occupation's attacks and massacres in Khan Yunis governorate from the early hours of this morning until now, 70 people have been martyred and more than 200 wounded," the Gaza health ministry said.
The Israeli military did not offer comment on the toll, when asked by AFP.
But in a statement, the military said its fighter jets and tanks "struck and eliminated terrorists in the area".
It said forces targeted more than "30 terror infrastructure" sites in Khan Yunis. Israeli warplanes also hit a weapons storage facility, observation posts, tunnel shafts and structures used by Hamas militants, it added.
Facing yet another displacement, Palestinians filled the dusty streets of Khan Yunis with cars, motorbikes, donkey-drawn carts, and on foot, carrying what belongings they could.
Hassan Qudayh said his family fled in "panic".
"We were happily making breakfast for our children, as we had been safe for a month, only to be stunned by shells, warning leaflets and martyrs in the streets," he told AFPTV.
"This is the 14th or 15th time we've been displaced.
"Enough! We've been suffering for 10 months."
- 'Tired and fed up' -
Hamas's October 7 attack on southern Israel resulted in the deaths of 1,197 people, mostly civilians, according to an AFP tally based on Israeli figures.
The militants also seized 251 hostages, 116 of whom are still in Gaza, including 44 the Israeli military says are dead.
Israel's retaliatory military campaign in Gaza has killed more than 39,000 people, also mostly civilians, according to data from the health ministry in Hamas-run Gaza.
The relentless fighting has plunged Gaza into a severe humanitarian crisis.
Yussef Abu Taimah from Al-Qarara in Khan Yunis said his family went to the humanitarian zone but found no space.
"Even the sidewalks are full of people and tents. We are tired and fed up. Enough of this displacement and migration".
Months of intermittent talks for the first ceasefire and hostage-prisoner swap since November have yielded little progress.
Netanyahu will meet Biden this week and deliver a landmark speech to Congress on Wednesday, amid unprecedented strains between Israel and its ally the United States.
The Israeli leader has repeatedly resisted pressure from the Biden administration to accept a truce, which far-right members of his coalition opposes.
Biden on Monday vowed to continue working to find a solution during his final months in office, a day after announcing his withdrawal from the US presidential race.
"I'll be working very closely with the Israelis and with the Palestinians" to end the war, achieve peace in the Middle East and return the hostages, he said in a public call into his campaign headquarters.
Netanyahu will hold a separate meeting during his visit with US Vice President Kamala Harris, who looks set to replace Biden atop the Democratic ticket, an aide to Harris told AFP on Monday.
Washington fears a voter backlash over the mounting civilian war toll in Gaza, while protests by anti-government demonstrators and families of hostages in Israel are pressuring Netanyahu at home.
"Never before has the atmosphere been so fraught," said Steven Cook, a Middle East specialist at the Council on Foreign Relations.
"There is clearly tension in the relationship, especially between the White House and the Israeli prime minister," Cook said in a commentary.
The visit comes with the Gaza war again fuelling regional violence.
Israel on Saturday attacked Yemen for the first time, in retaliation for a deadly drone strike on Tel Aviv by the Iran-backed Huthi rebels.
There were also further exchanges of fire between Lebanon's Iran-backed Hezbollah movement and the Israeli military at the weekend, as tensions remained high along the border.
An Israeli delegation will travel to Doha on Thursday to discuss new demands for a Gaza truce and hostage-prisoner exchange, a source with knowledge of the talks said.
Egypt, Qatar and the United States have been working to secure a deal between Israel and Hamas.
(Except for the headline, this story has not been edited by NDTV staff and is published from a syndicated feed.)