Monday afternoon, volunteers from a nearby Israeli settlement discovered their bodies in an open field not far from Hebron, a city in the southern West Bank.
The teens' disappearance -- which Israel blamed on Hamas -- had already worsened relations between Israel and the Palestinians.
The discovery threatens to make it worse.
Prime Minister Benjamin Netanyahu said the students had been "murdered in cold blood" by people he described as "animals."
"Hamas will pay," Netanyahu warned.
Hamas, the militant fundamentalist Islamic organization that operates in the West Bank and Gaza, denied it was behind the abductions.
If Netanyahu "brings a war on Gaza," the group warned, "the gates of hell will open to him."
The Israeli government, which held an emergency security Cabinet meeting about the issue, already appears to be taking action.
The West Bank homes of the two suspects Israel has identified in the kidnapping case were destroyed. And Israeli security forces stepped up airstrikes on Gaza.
Overnight into Tuesday, more than 40 Israeli airstrikes hit Gaza, according to Palestinian security and medical sources. The strikes targeted Hamas, Islamic Jihad and other militant groups, the sources said.
The Israeli military later said that forces had carried out strikes against 34 targets in Gaza, targeting terror infrastructure, after the firing of 18 rockets at Israel since Sunday evening.
"The war on terror continues. It didn't begin now and it will not be over soon," Maj. Gen. Nitzan Alon of the Israel Defense Forces said Monday, vowing to pursue those responsible for the teenagers' deaths.
The military said the identities of the dead still had to be officially confirmed, but a senior official expressed condolences to the families of the three youths: Eyal Yifrach, 19; Gilad Shaar, 16; and Naftali Frankel, a 16-year-old dual U.S.-Israeli citizen.
The Israel Security Agency said last week it believed that two "Hamas activists from Hebron" were behind the teens' disappearances. It identified them as Marwan Qawasmeh, 29, and Amar Abu-Isa, 32.
Within days of the teenagers' disappearance, Israeli security forces began conducting extensive hunts for them and their abductors, searching homes and detaining large numbers of Palestinians.
Palestinian medical sources told CNN on Tuesday that man was fatally shot in the chest, making him the sixth Palestinian to be killed by the Israeli military since the disappearance.
Mark Regev, a spokesman for Netanyahu, suggested Monday that the Palestinian Authority also bore some responsibility for what happened.
"It's clear that the terrorists came from areas under Palestinian Authority control and returned to territories under Palestinian Authority control," he said.
Regev urged Palestinian Authority President Mahmoud Abbas to annul his pact with Hamas.
Abbas called an emergency meeting of his own. The Palestinian leadership is expected to meet Tuesday to discuss the developments.
U.S. President Barack Obama, Pope Francis and U.N. Secretary-General Ban Ki-moon were among world leaders condemning the killings Monday.
"As a father, I cannot imagine the indescribable pain that the parents of these teenage boys are experiencing. The United States condemns in the strongest possible terms this senseless act of terror against innocent youth," Obama said in a statement.
"From the outset, I have offered our full support to Israel and the Palestinian Authority to find the perpetrators of this crime and bring them to justice," he said. "And I encourage Israel and the Palestinian Authority to continue working together in that effort. I also urge all parties to refrain from steps that could further destabilize the situation."
Among many Israelis, the heartbreaking end to the teenagers' disappearance has stirred strong emotions.
"It's a sad and tragic day for the people of Israel," said CNN Middle East Analyst Michael Oren.
"In addition to deep sadness in the Israeli public, there's a growing anger and demand for a response," he said.
An aunt of one of the victims told CNN she was still in shock.
"I'm holding his picture and I see his smile," said Leehy Shaar, Gilad Shaar's aunt. "He's so young and innocent ... It's just too sad to even imagine."
Two Palestinians armed with a gun, knives and axes stormed a synagogue complex in an ultra-Orthodox Jewish neighborhood of West Jerusalem on Tuesday morning, the Israeli police said, killing four men in the middle of their morning prayers.
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