The coordinated attack carried out on Wednesday by an affiliate of Daesh in Sinai against multiple Egyptian military targets, killing at least 70 soldiers and capturing a coastal town for a few hours, was the largest such operation carried out on Egyptian soil and could turn out to be a pivotal moment for the region.
For Egypt it proves what has been increasingly clear since the revolution in early 2011 - that its forces have lost control of much of the huge peninsula.
Outside the army's tenuous hold on the northern and southern coastal regions, jihadists, often aided by local Bedouin tribes, roam freely.
The large and relatively well-equipped Egyptian army suffers from low morale, poor leadership and endemic corruption. All of these factors add up to an army with little initiative and an inability to carry out a comprehensive search-and-destroy campaign against the jihadis in their mountain redoubts.
Coming only two days after the assassination of Prosecutor-General Hisham Barakat in Cairo, also by a massive car bomb, this attack indicated that Egypt is facing a protracted assault which its security forces seem powerless to stop.
It will almost certainly result in a pavlovian response with greater suppression of civil rights by the regime.
Daesh once again proved its ability to spread its modus operandi to new theatres. The Ansar bait al-Makdas group, which has sworn allegiance to the Daesh's Caliph, has mainly used arms pillaged from the Libyan army, but the way in which it fought on Wednesday is reminiscent of Daesh tactics in Syria and Iraq. In both countries, these tactics have been extremely effective against corrupt and demoralised armies.
It is still unclear what implications this will have for Hamas in Gaza and its Muslim Brotherhood patrons in Egypt. There have been reports of various levels of cooperation between them and the jihadists. On the other hand, Daesh this week announced its support for the Salafist groups currently challenging Hamas in Gaza. None of this will make much difference for the Egyptian generals, however, who may decide to crack down further on the Brotherhood and perhaps even bomb Gaza.
For Israel, the prospect of Sinai - a huge area bordering the entire southern half of the country - spiralling into chaos, is a dismal one.
To get more news, click here to sign up for our free daily newsletter.