Hamas said that "due to the lack of commitment" by Israel, it resumed its fire. Israeli Prime Minister Benjamin Netanyahu said that Hamas showed it could not be trusted after it violated other cease-fire efforts.
"Israel is not obliged and is not going to let a terrorist organization decide when it's convenient to fire at our cities, at our people, and when it's not," Netanyahu told "Fox News Sunday."
International diplomats had hoped a temporary lull could be expanded into a more sustainable truce to end the bloodshed and U.N. chief Ban Ki-moon urged the sides on Sunday to accept a 24-hour break in fighting.
The 20-day war has killed more than 1,030 Palestinians, mainly civilians, according to Palestinian health officials. Israel has lost 43 soldiers, while two Israeli civilians and a Thai worker in Israel were killed by rocket and mortar attacks from Gaza.
The Palestinian death toll was revised Sunday and an earlier figure dropped by 30 deaths, Gaza health official Ashraf al-Kidra said.
Israel says it launched the war on Hamas July 8 to halt relentless rocket fire. It expanded its assault over a week later, sending ground troops into the Gaza Strip to demolish Hamas' wide network of tunnels, which Israel sees as a strategic threat.
Each side remains far apart on terms for a final cease-fire. Hamas has demanded that a crippling Israeli and Egyptian blockade of Gaza be lifted and Israel has asked that Gaza be demilitarized.
Following Hamas' call for a break in fighting, an Israeli airstrike killed one person in Gaza when it hit a vehicle carrying municipal workers on their way to fix water pipes, the Palestinian Red Crescent said.
Police said Israeli tanks resumed firing shells on densely populated areas south of Gaza City. One shell hit an apartment building and several shells struck a building at Tal Al Hawa. Navy boats also resumed firing on the coastal side of Gaza, police said. The Israeli military did not immediately confirm that it resumed strikes.
Families in Gaza ordinarily would be busy now with preparations for the three-day Eid al-Fitr holiday, with children getting new clothes, shoes and haircuts, and families visiting each other.
In the outdoor market of the Jebaliya refugee camp, vendors set up stands with clothes and shoes, but said business was slow. Hamed Abul Atta, 22, a shoe salesman, said he hadn't made a single sale in the first three hours after opening.
Abul Atta said he and his family were staying with relatives after fleeing the Shijaiyah district of Gaza City, which has seen heavy fighting. He said a cousin and three other relatives were among dozens of people killed there last week.
"We can't feel any joy right now," he said when asked if he would mark the holiday.
Also after Hamas' call for a cease-fire, a rocket fired from Gaza lightly wounded one person in Israel, police said. Sirens wailed in a number of southern Israeli towns.
The Israeli military said earlier it would "resume its aerial, naval and ground activity in the Gaza Strip" after rockets continued to hit Israel. It said more than 50 rockets had been fired since midnight. The military also released a video showing a rocket being fired from what it identified as a Gaza school.