Hamas-run Gaza’s civil defence agency found around 60 bodies after Israeli troops withdrew from parts of Gaza City on Friday.
Heavy fighting continues in the Palestinian territory.
The discovery came as international mediators pushed for a ceasefire in the war now raging into its 10th month.
US President Joe Biden said diplomats were making progress towards ending the conflict.
The bodies were located in the Tal al-Hawa and Al-Sinaa districts.
Israeli forces had entered these neighborhoods after ordering civilians to evacuate earlier in the week.
Agency spokesman Mahmud Bassal reported that many people are still missing under the rubble of destroyed homes, making it difficult for rescue crews.
The situation remains dire for civilians.
Gaza’s health ministry reported 32 deaths, mostly children and women, amid continued airstrikes.
The Israeli army dropped leaflets urging residents to flee Gaza City, where thousands remain trapped.
