In a rare Saturday meeting, Prime Minister Ariel Sharon, Defense Minister Binyamin Ben Eliezer and Foreign Affairs Minister Shimon Peres rescinded Israel's unilateral cease-fire, paving the way for military reprisals in response to the suicide bombing. Even so, approved military actions were temporarily delayed in the wake of Arafat's declaration.

A communiqué issued by the political-security cabinet "determined that the Palestinian Authority (PA) and Chairman Arafat are engaged in terrorist activity, encourage it and are inciting to hatred and violence." The communiqué further stated, "Israel… will draw the security and political conclusions from its conduct."

Following the Tel Aviv attack, the I.D.F. immediately imposed a full closure on the territories, and closed the Allenby Bridge and Rafah border crossings and the Gaza International Airport. In addition, Palestinians were restricted from entering Israel proper, including those with valid work permits.

Palestinian media began broadcasting instructions to citizens to prepare for an Israeli military strike. Security installations were reportedly vacated and leaders of terrorist groups allegedly went into hiding.

Worst single attack of Al-Aksa Intifada
Shortly before midnight on Friday night crowds of teenagers were waiting outside the entrance to two discotheques at Tel Aviv's Dolphinarium. Many were planning to attend a dance party at the Dolphin Disco, a site frequented by young Russian immigrants. Apparently a suicide bomber mingled in the crowd before detonating the explosives he was carrying.

According to Tel Aviv Police Chief Cmdr. Yossi Sedbon, the explosive charge was not large, but contained screws, nails, and ball bearings to make it as deadly as possible. Israeli courts have issued a publicity ban on details of the case. Conflicting reports in the media attributed the responsibility for the bombing to different organizations, including the Islamic Jihad.

Police Commissioner Shlomo Aharonishky said it was impossible to prevent all such suicide bombings. "We have to continue to operate on the ground in an effort to cut down the number of attacks as much as possible. Even though we have succeeded many times, this time it is very bad."

Emergency teams began providing medical care to the many injured outside the discotheque. Ambulances transported the wounded to five Tel Aviv-area hospitals. The many victims of the suicide bombing made the attack the worst single strike of Palestinian terrorists since the start of the Al-Aksa Intifada with the highest death toll since the wave of Palestinian terrorism in 1996.

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