The military said the hostages were killed during combat with militants in Gaza and expressed its condolences to the families while saying there would be "full transparency" in the investigation into the incident.
A statement from the military said that during an intense battle in Gaza it "identified three Israeli hostages as a threat." It said, "As a result, the troops fired toward them and they were killed."
The military named the dead hostages as Yotam Haim, who was kidnapped from Kibbutz Kfar, Samer Talalka, who was abducted from Kibbutz Nir Am, and Alon Shamriz, who was taken from Kibbutz Kfar Aza. All were abducted by Hamas on Oct. 7, it said.
The Hostages and Missing Persons Families Forum, which represents the families of hostages, expressed its condolences and confirmed the names of the three hostages.
It said, "Yotam was a gifted musician and dedicated metal music fan who idolized the band Megadeth" and "Samer was an avid motorcyclist who loved to ride around the countryside and spend time with friends." The forum said, "Alon's family and friends described him as a lover of life and a dedicated basketball fan."
In recent days Israel has engaged in intense battles with Hamas militants, who often wear casual civilian clothing, and on Wednesday announced its worst combat losses with 10 soldiers killed in 24 hours.
Hamas rampaged through Israeli towns killing 1,200 people and capturing 240 hostages on Oct. 7. Israel then launched a counterattack, during which Gaza health authorities say close to 19,000 people have been confirmed killed, with thousands more feared buried under rubble.
During a week-long truce in late November, Hamas released more than 100 women, children and foreigners it was holding in Gaza in exchange for the release of 240 women and teenagers. They had been arrested for such offences as attempted stabbings, stone throwing at Israeli soldiers or having contact with hostile organisations, and many were held under administrative detention, meaning Israel held them without trial.
"Together with the entire people of Israel, I bow my head in deep sorrow and mourn the death of three of our dear sons who were kidnapped," Israeli Prime Minister Benjamin Netanyahu said in a statement. "My heart goes out to the grieving families in their difficult time."
Thousands of people protested outside Israel's central military base in Tel Aviv with signs saying "We demand a deal now!" and "Not going to sleep -- protesting all night," Israel's Channel 12 news reported.
More than 100 hostages still remain in Gaza. Some have been declared dead in absentia by Israeli authorities.
Earlier on Friday, the Israeli military said it had recovered the bodies of three Israelis -- a civilian and two soldiers -- who had been held in the Gaza Strip by Hamas.
