Israel also conducted strikes on around 20 underground sites used by Palestinian groups to store long-range missiles.
Hamas television reports claimed the Al-Qassam Brigades had "declared war on Israel" in response to the strike.
The IDF confirmed Israeli forces had launched an operation - titled "Pillar of Defence" - following the targeting of Israeli civilians.
In a statement, Israeli intelligence agency Shin Bet said: "Jabari was responsible for financing and directing military operations and attacks against Israel.
"His elimination today is a message to Hamas officials in Gaza that if they continue promoting terrorism against Israel, they will be hurt."
Earlier on Wednesday rockets thought to be fired from the Sinai peninsula landed on a small Israeli community close to the Egyptian border.