A statement from the Israeli military reads, "In line with a political decision and in view of the situation, the whole of the Gaza Strip has been totally sealed off."
Wednesday's attack at the Erez Crossing in Gaza killed three Israeli soldiers and a security guard. The soldiers, all immigrants from the former Soviet Union, died when Reem Raiyshi, a 22-year-old mother of two blew herself up, escaping detection by saying she had a metal plate in her leg. Several others were wounded including four Palestinians, the army said.
Islamic militant groups Hamas and the Al Aqsa Martyrs' Brigades claimed joint responsibility for the attack, marking the first time Hamas used a woman as a suicide bomber. The group said they had used a woman to lower the possibility of detection.
The decision to seal off the Gaza Strip prevented thousands of Palestinian workers from getting to jobs in Israel and shut down the Erez industrial park, where many Palestinians work.
One Palestinian worker condemned the groups for jeopardizing his income.
"No one is supporting the (Israeli) occupation, but if you want to fight you have to think of others," Rami Mansour told the Associated Press.
Before the latest round of violence in Israel, about 100,000 Palestinians from Gaza worked in Israel. Today, only about 20,000 Palestinian workers are allowed permits to cross the Erez checkpoint.
The Israeli military commander in Gaza, Brig. Gen. Gadi Shamni said Israel would retaliate against the attacks.
"I imagine that we will know how to respond at the time, place and method of our choosing," he told Israel TV.
As in past attacks that targeted military outposts, the Palestinian Authority failed to condemn the bombing.
Prime Minister Ahmed Qurei, in office only three months, said continued attacks on Palestinians have led to "escalation on both sides."
On Thursday, thousands of Palestinians marched through Gaza as masked Hamas and Al Aqsa members carried Raiyshi's coffin.
"It is not enough to call her a hero," said Hamas leader Mahmoud Zahar. "Calling her a hero does not give the whole truth. This woman abandoned her husband and children in order to win paradise."
Israeli military leaders did not say why Raiyshi's body had been returned to Palestinians. Past suicide bombers have been buried by Israelis in unmarked graves to prevent martyr-like funerals.