More than 60 Palestinians were killed Sunday as Israeli forces bombarded Shejaiya, sending thousands fleeing in the deadliest assault on the Palestinian enclave in five years.
"What Shejaiya is undergoing today in terms of brutal bombing operations are war crimes against Palestinian civilians and a dangerous escalation that could have further consequences," Arab League chief Nabil al-Arabi said in a statement.
He called for an "immediate stop of Israeli aggression on Gaza and the necessary protection of Palestinian civilians".
"Israel is fully responsible for this crime that killed dozens of innocent Palestinian civilians," Arabi said.
Egypt's foreign ministry also "denounced the escalation of the military operation in Gaza, especially in Shejaiya".
It said Foreign Minister Sameh Shoukri spoke to several Arab counterparts, US Secretary of State John Kerry and Palestinian peace negotiator Saeb Erakat over the Gaza crisis.
Egypt, which has been a mediator in previous Israel-Hamas conflicts, had proposed a halt to the fighting but Hamas rejected Cairo's initiative, saying it had not been consulted.
Israel initially accepted the Egyptian proposal but later intensified its campaign following Hamas's rejection of it.
The 13-day conflict in Gaza between Israel and the militant Hamas movement has killed more than 410 Palestinians and seven Israelis -- five soldiers and two civilians.