GAZA CITY, Gaza Strip - Israel killed Hamas founder Ahmed Yassin in a helicopter missile strike outside a Gaza City mosque today, prompting threats of unprecedented revenge by Palestinian militants against Israel and the United States.

Yassin was the most prominent Palestinian leader killed by Israel in more than three years of fighting, and his assassination was seen as a major escalation.

More than 200,000 Palestinians, some carrying billowing green Hamas flags, flooded the streets for the funeral procession, the largest gathering in Gaza City in recent memory. Thousands also took to the streets in the West Bank.

Mourners jostled to touch Yassin's flag-draped coffin, and women ululated and threw flowers and candy. Two Israeli helicopters flew above, and the sky was blackened from the smoke of tires set ablaze in the streets by protesting Palestinians.

At the cemetery, Yassin's body was carried between two rows of 200 militants armed with anti-tank missiles and machine guns.

"Words cannot describe the emotion of anger and hate inside our hearts," said Hamas official Ismail Haniyeh, a close associate of Yassin.

Israeli Prime Minister Ariel Sharon called Yassin the "mastermind of Palestinian terror" and a "mass murderer who is among Israel's greatest enemies."

Sharon said Israel will press ahead with its war on terror, signaling more targeted attacks and raids. "The war against terror has not ended and will continue day after day, everywhere," he said.

Bush administration National Security Adviser Condolezza Rice said Washington had "no advance warning" of the attack. Rice said she knew of no consultations between Sharon and President Bush about any plan to target the sheik.

But Rice, asked about U.S. reaction to the attack during an interview on NBC television, said, "Let's remember that Hamas is a terrorist organization and that Sheik Yassin has himself, personally, we believe, been involved in terrorist planning."

State Department spokesman Lou Fintor said U.S. officials were in touch with Israeli and Palestinian authorities. "The United States urges all sides to remain calm and exercise restraint," he said.

Israeli helicopters fired three missiles as Yassin, his bodyguards and dozens of others left a mosque in Gaza City at daybreak today. Yassin, a quadriplegic who uses a wheelchair, and seven others were killed, including several bodyguards. Seventeen people were wounded.

Only a charred metal seat and a twisted wheel were left of his wheelchair and a blood-soaked brown shoe lay in the street. "Two or three people were lying next to him on the ground. One was legless," said taxi driver Yousef Haddad, who had rushed out of a nearby grocery when the missiles shook the Sabra neighborhood.

Fearing reprisal attacks, Israel sealed off the West Bank and Gaza and confined many West Bank Palestinians to their communities. The Rafah border crossing between Gaza and Egypt was also closed. Troop reinforcements were sent to Gaza, and security forces in Israel were placed on high alert.

Three more Palestinians were killed in Gaza later today in clashes with Israeli troops, and one was killed while handling explosives.

Sharon, a former army general, was updated throughout the operation.

"The Israeli air force this morning killed the mastermind of all evil, Ahmed Yassin, who was a preacher of death," said army spokeswoman Brig. Gen Ruth Yaron.

The Yassin assassination was seen as an enormous gamble by Sharon, who is trying to score a decisive victory against Hamas ahead of a possible Israeli withdrawal from Gaza, but risks triggering a dramatic escalation in bloodshed that could turn the public's mood in Israel against him.

Sharon's critics in Israel warned that the Yassin killing could be seen as an attack by Israel on Islam and unnecessarily widen the circle of conflict.

The Palestinian Authority said in a statement that "Israel has exceeded all red lines with this cheap and dirty crime," and declared a three-day mourning period.

Flags at Yasser Arafat's headquarters in the West Bank town of Ramallah were lowered to half-staff, and the Palestinian Cabinet held an emergency session. Yassin was Arafat's biggest political rival, but Arafat has always been careful not to confront the Hamas leader openly.

Cabinet ministers stood as Arafat recited a Muslim prayer for the dead. The Palestinian leader, referring to Yassin, then added: "May you join the martyrs and the prophets. To heaven, you martyr."

Palestinian Prime Minister Ahmed Qureia said the Palestinians have lost "a great leader."

Earlier today, about 2,000 demonstrators gathered at Arafat's headquarters, calling for revenge. Arafat remained inside, apparently fearing he too might be targeted by Israel.

However, an Israeli security official said there were no immediate plans to target Arafat, and that Hamas was the focus of Israel's current offensive.