Israeli Prime Minister Naftali Bennett said his country was facing a “difficult and challenging period” after the fourth deadly attack within weeks.
Two people were killed on Thursday when a gunman opened fire at a night spot in Tel Aviv, leading to a manhunt involving hundreds of officers across the coastal city.
“The incident in Tel Aviv has ended, but we are not lowering our level of alert either in Tel Aviv or in the rest of the country,” Mr Bennett said.
He said the gunman was a 29-year-old Palestinian from Jenin, a city in the occupied West Bank.
“Attacks by lone terrorists without organisational infrastructure are a major challenge for the security establishment but it will meet them,” he said.
The assailant was killed in an early morning shoot-out with security forces in Jaffa, south of Tel Aviv, the police said.
Two Israeli men in their 20s were shot dead and four people seriously wounded in the attack at a bar-restaurant in central Tel Aviv.
“Right away people were yelling, a lot of yelling and a lot of screaming,” said Yael Machtinger, 35, who lives a few doors down from the venue.
Following police orders, she and her neighbour stayed indoors while members of the security forces swept residential buildings in search of the attacker.
“[There were] tons of police and medics running, people covered in blood, soldiers,” said Ms Machtinger, a Canadian academic.
Fragments of glass were still visible on the street outside the scene of the shooting on Friday, while Israeli flags had been attached to blue police barriers.
People lit candles and laid flowers, while heavily-armed members of the security forces were stationed along the street, which is lined with shops and bars.
Nicola Simmonds, 53, said the scene reminded her of a deadly shooting on the same street in 2016.
“Having special forces on the streets of Tel Aviv is something that we’re not used to,” said Ms Simmonds, a tour guide.
“I don’t have any political solution, I’m also very disappointed that we haven’t made it any further than this and this is still going on."
The Tel Aviv incident brings to 13 the number of people killed in four attacks across Israel since March 22.
Israeli officials said the attackers were either Arab-Israelis or Palestinians from the West Bank, all of whom were shot dead.
Eight Palestinians have been killed by Israeli forces across the West Bank since the start of March, according to Palestinian Health Ministry records.
The Tel Aviv shooting led Israeli forces to close a checkpoint north of Jenin, preventing Palestinians from entering Israel through the usually busy crossing.
Palestinian President Mahmoud Abbas condemned the latest attack and “reiterated that the killing of Palestinian and Israeli civilians only leads to a further deterioration of the situation”.
Gaza rulers Hamas, who have fought four wars with Israel since 2007, praised the attacker as a “brave fighter”.
More than 5,900 Palestinians were killed in the Israeli-Palestinian conflict between 2008 and 2021, according to UN data. Over the same period, there have been 262 Israeli fatalities.