Palestinian witnesses said he was killed in an air strike on a car he was driving. Khoudary owned a money exchange business that was declared a terrorist organization by Israel in June 2018.
The incident comes as a massive barrage against southern Israel continued for a second day. Two Israelis were killed Sunday when rockets fired from Gaza hit a factory in Ashkelon and a car near Sderot in quick succession. The deaths came hours after another man died from shrapnel wounds after a rocket landed near his home in Ashkelon.
"In recent years, Khoudary and his company established themselves as the main player in Gaza’s foreign exchange business,” said the IDF Spokesperson’s Unit in a statement. “Khoudary transferred large sums of money to Hamas, Islamic Jihad and other terrorist organizations in the Gaza Strip through his company, using the help of foreign companies that were aware of the fact, Khoudary was running a business considered a terror organization.
"Khoudary’s financial dealings, which served as Iran’s headquarters in the Gaza Strip, contributed significantly to the promotion of terrorist activities in the area,” the statement said.
Earlier, two militants - believed to be from Islamic Jihad - were killed after an Israeli aircraft struck a terror cell preparing to launch rockets into Israeli territory east of Gaza City.
The strike prompted the terror group to issue a statement threatening to expand the range of rocket fire.
"We are ready for a full-on military campaign … If Israel continues to bomb residential houses, every city and region in Israel will be hit,” Islamic Jihad said in a statement.
The latest round of violence began on Friday when a Palestinian Islamic Jihad sniper fired at Israeli troops, wounding two soldiers, according to the Israeli military. Israel retaliated with an air strike that killed two militants belonging to Hamas' military wing, which controls Gaza.