Now, Israelis are left to face the prospect that the entrenched conflict with the Palestinians is intensifying radicalization within both populations.

Image Prime Minister Benjamin Netanyahu called the killing of the Palestinian youth a horrific crime. Credit... Pool photo by Gali Tibbon

On Sunday some Israelis compared the moment to that of watershed events like the assassination of Prime Minister Yitzhak Rabin in 1995 by a right-wing Israeli fanatic, or the massacre by Baruch Goldstein, an American-born Israeli doctor, of 29 Palestinian Muslims at prayer in 1994 in Hebron’s Tomb of the Patriarchs.

“This is a wake-up call,” said Prof. Shlomo Avineri, a political scientist at the Hebrew University of Jerusalem, accusing the government and the security services of not having dealt seriously enough in recent years with an extreme, nationalist fringe that has desecrated mosques and destroyed Palestinian property. Now, with the killing of Muhammad, Professor Avineri said, “a line has been crossed.”

“This is absolute evil,” he added.

In addition to the rioting, tensions spiked along the border with Gaza in the south, with Palestinian militants firing at least 25 rockets into Israel on Sunday and Israel carrying out airstrikes.

Hamas, the Islamic group that dominates Gaza, said Monday that seven of its militants had been killed in airstrikes on Sunday and early Monday, probably the heaviest death toll suffered by the group since a cease-fire came into effect in late 2012. In addition, two militants thought to belong to a more radical Islamic group were killed in an airstrike. Israel said they had been involved in firing rockets.

For Mr. Netanyahu, Sunday’s arrests were clearly a pivotal moment. He has been lobbied by right-wingers in his government to take tougher action against the Palestinians since the bodies of the three Israeli teenagers were found last week, and in the wake of the increasing rocket fire from Gaza.