Tens of thousands of Islamic Jihad supporters gathered in al-Kateba square in Gaza City on Thursday to celebrate the 31st anniversary of the movement's founding.
The event also marked the 17th anniversary of the assassination of Islamic Jihad's founder Fathi al-Shiqaqi.
Islamic Jihad secretary-general Ramadan Shallah addressed the crowds and called for a new national strategy.
"The Palestinian project of establishing a state on the 1967 borders through negotiations has obviously failed," Shallah said.
Nineteen years of failed negotiations have created a crisis which cannot be resolved by insisting on more negotiations, or through non-violent resistance, he added.
Shallah said Islamic Jihad supported all methods of resistance, and would not rule out armed struggle from the Palestinian agenda.
He said regional revolutions were "a double-edged sword": they gave hope to Palestinians, but Arab countries were too embroiled in domestic concerns to help the Palestinian cause.
"We are not calling on anyone to get into a war with Israel but at least we can make a political war to protect Jerusalem and the Al-Aqsa Mosque."
Shallah said the Gaza Strip was no better off under Egypt's post-revolutionary government than it had been when Hosni Mubarak held the Egyptian presidency.
Regarding Syria, he urged a political rather than a military solution, and said the country's unity must be guaranteed.