Residents of Al-Rimal, which before the war was home to Palestinian government buildings and most of Gaza City's remaining shops and restaurants, said bodies had been left lying in the streets.
The Hamas-run territory's civil defence agency said scores of dead had also been found in nearby districts after Israeli troops ended a new operation against militants in parts of Gaza City.
Al-Rimal has been flattened by successive Israeli military operations since the Hamas attacks across the border started the Gaza war on October 7.
The neighbourhood had already suffered in previous showdowns with Israel since Hamas seized sole control of the territory in 2007. Several apartment blocks were hit by Israeli fighter jets in 2021.
Teacher Tariq Ghanem said this time Israeli troops had wreaked "massive destruction" on Al-Rimal.
"The houses are on fire and there are shells everywhere," the 57-year-old said.
"There have been bodies on the roads for the past week and... there is no one to retrieve them. There are injured people everywhere and no one can reach them."
'Dangerous combat zone'
The Israeli military ordered the evacuation of Al-Rimal, Tal al-Hawa and other districts of Gaza City on Monday and has since warned that the whole city is a "dangerous combat zone".
One major target of the assault was the abandoned headquarters of the UN Palestinian refugee agency (UNRWA) in Al-Sinaa district that the army said had been taken over by Hamas.
A military statement said troops had found "parts for assembling an unmanned aerial vehicle, war rooms used for surveillance operations and large quantities of weapons, including tactical drones, rockets, machine guns, mortars, explosives and grenades."
But residents said buildings across the city suffered heavy damage in the assault.
"There are many appeals for help, but we just cannot reach them," said civil defence agency spokesman Mahmud Bassal.
He said dozens of bodies were "scattered in alleys and inside destroyed houses" but his agency did not have the staff to recover them.
AFP correspondents saw heavy destruction across the city with several blocks barely standing.
Residents used donkey carts to ferry the wounded to hospital or to recover what belongings they could from the rubble.
Bassal said about 60 bodies had been found in the Tal al-Hawa and Al-Sinaa districts on Friday. The agency and residents said Israeli troops had pulled out but this was not immediately confirmed by the military.
On Thursday, the civil defence agency said 60 bodies had been found in another neighbourhood of Gaza City, Shujaiya, after Israeli troops pulled out, ending a two-week assault.
The army said more than 150 "terrorists were eliminated" in its operation in Shujaiya, including Hamas commanders.
