His killing marks a huge success for Israel and a pivotal event in the year-long conflict. There are a number of possible scenarios for what happens next but Israeli Prime Minister Benjamin Netanyahu said the war would go on.
The Israeli military said it had killed Sinwar in an operation in the southern Gaza Strip on Wednesday.
"After completing the process of identifying the body, it can be confirmed that Yahya Sinwar was eliminated," it said.
Netanyahu, speaking in Jerusalem, said Sinwar's death offered the chance of peace in the Middle East but warned that the war in Gaza was not over and Israel would continue until its hostages were returned.
"Today we have settled the score. Today evil has been dealt a blow but our task has still not been completed," Netanyahu said in a recorded video statement. "To the dear hostage families, I say: this is an important moment in the war. We will continue full force until all your loved ones, our loved ones, are home."
U.S. President Joe Biden said Sinwar's death marked a moment of relief for Israelis while providing the opportunity for a "day after" in Gaza without the militant group in power.
He said he would speak soon with Netanyahu to discuss bringing home Israeli hostages in Gaza and "ending this war once and for all."
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Sinwar, who was named as Hamas' overall leader following the assassination of political chief Ismail Haniyeh in Tehran in July, was believed to have been hiding in the warren of tunnels Hamas has built under Gaza over the past two decades.
His death could dial up hostilities in the Middle East where the prospect of an even wider conflict has grown. Israel has launched a ground campaign in Lebanon over the past month and is now planning a response to an October 1 missile attack carried out by Iran, ally of Hamas and Lebanon's Hezbollah.
But the demise of the man who planned the attack last year in which fighters killed 1,200 people in Israel and captured more than 250 hostages, according to Israeli tallies, could also help push forward stalled efforts to end the war in which Israel has killed more than 42,000 Palestinians, according to Gaza health authorities.
Israel's Army Radio said the killing had occurred during a ground operation in the city of Rafah in the southern Gaza Strip.