The strike came after Palestinians launched more than 100 rockets, mainly at southern Israel. Some were intercepted by the Iron Dome anti-missile system and no casualties were reported on the Israeli side.
Egypt, which has been trying to broker a long-term ceasefire in indirect Israeli-Palestinian talks, said it would continue contacts with both sides, whose delegates left Cairo after hostilities resumed on Tuesday.
But there appeared to be no end in sight to violence that shattered a 10-day period of calm, the longest break from fighting since Israel launched its Gaza offensive on July 8 with the declared aim of ending rocket fire into its territory.
Israeli aircraft have carried out 80 strikes in the Gaza Strip since Tuesday, "targeting terror sites".
Hamas and medical officials said 19 people were killed in the latest Israeli raids, including Deif's wife and baby son. Deif is widely believed to be masterminding the Islamist group's military campaign from underground bunkers.
A Hamas official said Deif had not used the targeted house, where the bodies of three members of the family that lived there were also pulled out of the rubble.
Accusing Israel of opening a "gateway to hell", Hamas fired rockets at Tel Aviv and Jerusalem late on Tuesday, demonstrating the Islamist movement could still reach Israel's heartland despite heavy Israeli bombardments in the five-week-old conflict.
There was no official confirmation from Israel that it had tried to kill Deif, who has been targeted in air strikes at least four times since the mid-1990s. Israel holds him responsible for the deaths of dozens of its citizens in suicide bombings.
"I am convinced that if there was intelligence that Mohammed Deif was not inside the home, then we would not have bombed it," said Yaakov Perry, Israel's science minister and former security chief.
Israeli police minister Yitzhak Aharonovitch, a member of Benjamin Netanyahu's security cabinet, promised: "We will continue to hit the heads of Hamas."
Five children were killed in separate air strikes, according to Gaza health officials, and the Israeli military said it targeted two gunmen in northern Gaza.
The Palestinian Health Ministry says 2,036 people, most of them civilians, have been killed in Gaza. Israel says it has killed hundreds of Palestinian militants in fighting that the UN says has displaced about 425,000 people.
Sixty-four Israeli soldiers and three civilians in Israel have also been killed in the most deadly and destructive war Hamas and Israel have fought since Israel withdrew unilaterally from Gaza in 2005, before Hamas seized the territory in 2007.
Accusing Hamas of breaking the truce with rocket fire eight hours before it was to have expired, Israel recalled its negotiators from truce talks in Cairo on Tuesday, leaving the fate of the Egyptian-brokered efforts hanging in the balance.
Palestinian negotiators walked out of the talks later, blaming Israel for their failure. "Israel thwarted the contacts that could have brought peace," said chief Palestinian negotiator Azzam al-Ahmed.