Attendees listened to the parents of the three youths read eulogies for their sons
Israeli leader Benjamin Netanyahu has vowed to find those behind the kidnap and murder of three teenagers hitchhiking in the occupied West Bank.
He also promised strong action against Palestinian militant group Hamas, which he blamed for the killings. Hamas denies any involvement.
Thousands turned up to the funeral of the three youths on Tuesday in Modein.
The teenagers' bodies were found on Monday evening, more than two weeks after the trio went missing.
Israel's security cabinet met twice after the bodies of Naftali Frenkel, Gilad Shaar and Eyal Yifrach were found under a pile of rocks near the Palestinian town of Halhul.
An Israeli official said it appeared the youths had been shot soon after their abduction.
'PUNISHING A NATION'
Netanyahu said: "Whoever was involved in the kidnapping and the murder will bear the consequences."
He said the priorities were to:
- find the teenagers' killers and kidnappers
- weaken Hamas' infrastructure and manpower in the West Bank
- operate against Hamas in the Gaza Strip, expanding the operation "if the need arises"
Correspondents say the cabinet has been split over next steps, with some ministers calling for wider military action and others warning against aggravating tensions.
Israeli troops entered Halhul after the youths' bodies were discovered, blockading some areas.
Soldiers raided the homes of two Hamas members named as suspects - Marwan Qawasmeh, and Amer Abu Aisha - and detonated explosives.
Hanan Ashrawi, a senior Palestine Liberation Organization (PLO) official, told the BBC that Israel's response was heavy handed.
"You cannot sort of use every development like this in order to punish a whole nation, which is what Israel has been doing," she said.
"In the month of June alone, 14 Palestinians were killed... by the Israeli occupation."
Meanwhile, the US described the killing of the youths as a "terrible, terroristic act".
White House spokesman Josh Earnest said: "Both sides have to exercise restraint, to prevent this one terrible act from leading to a much broader, much more destabilising situation."