Days of tension in Jerusalem escalated into an exchange of fire on Monday, as Hamas fired dozens of rockets toward Israel and the Israeli military responded with strikes of its own and said it was preparing for a military operation that could last several days.

Why it matters: This is the first time Hamas has fired rockets at Jerusalem since 2014, and it's the most serious escalation between the Israelis and Palestinians in many months. It comes during the most sensitive days on the calendar — the last days of Ramadan and the Jerusalem Day commemoration on Monday — and as political crises roil both the Israeli and Palestinian governments.

Driving the news: Starting early Monday morning, Palestinian protesters clashed with Israeli police in the Old City of Jerusalem at the al-Aqsa Mosque compound, or Temple Mount, one of the holiest sites for both Muslims and Jews. Around 300 Palestinians were wounded, with 10 in critical condition.

• Those clashes followed days of protests over the planned evictions of six Palestinian families from a Palestinian neighborhood in East Jerusalem to make way for Jewish settlers. Israel's Supreme Court delayed its decision on the evictions on Sunday.
• After a tense phone call Sunday evening between U.S. national security adviser Jake Sullivan and his Israeli counterpart, Meir Ben-Shabbat, Israel started taking steps to de-escalate the situation.
• Prime Minister Benjamin Netanyahu ordered the closure of the Temple Mount to Jewish visitors and later ordered the rerouting of an annual nationalist parade so that it would not pass through the Muslim Quarter and the Damascus Gate, two potential flashpoints in the Old City of Jerusalem.

But the militant group Hamas gave Israel an ultimatum on Monday afternoon, threatening military action if all Israeli police didn't leave the al-Aqsa Mosque compound by 11am ET.

• Minutes after the deadline expired, Hamas fired rockets from Gaza toward Jerusalem — around 50 miles away. Hamas then fired another 40 rockets toward Israeli towns close to Gaza.
• The Israeli air force retaliated with strikes in Gaza and said it had killed three Hamas operatives. Gaza health officials said 20 Palestinians were killed, including nine children.
• What to watch: The Israeli Security Cabinet convened for an emergency meeting and decided on a wider response, which Israeli military officials said would be wide-ranging and could last several days.

The latest:

• State Department spokesperson Ned Price said the U.S. condemned the attacks on Israel "in the strongest terms" and recognized Israel's right to defend itself. Price called on all parties to seek to de-escalate the situation.
• "The terror organizations in Gaza crossed a red line when they fired missiles to Jerusalem," Netanyahu said. "Israel will retaliate strongly. The current confrontation could take some time."

The big picture: The current escalation comes amid deep political crises on both the Palestinian and Israeli sides.

It complicates the efforts of Netanyahu rivals Yair Lapid and Naftali Bennett to form an alternative government as soon as this week to oust the prime minister, who was unable to form a government of his own after elections in March.

• Monday's violence led Mansour Abbas, leader of the Ra'am Islamist party — an offshoot of the Muslim Brotherhood and sister movement of Hamas — to suspend coalition talks.
• Lapid and Bennett have been trying to convince Ra'am to support their alternative government, while Netanyahu also met Abbas on Sunday in an attempt to convince him not to join the alternative government.

Meanwhile, Palestinian President Mahmoud Abbas postponed long-awaited parliamentary elections that had been scheduled for May 22.

• Between the lines: Abbas blamed alleged Israeli obstruction in canceling the vote, which he was in danger of losing, and later backed the Palestinians who were confronting Israeli police in Jerusalem.
• Hamas, meanwhile, is trying to win popular support in Jerusalem and the West Bank by backing the protests in Jerusalem and firing rockets from Gaza.