The baby's body, wrapped in blue, was placed on those of her parents as Palestinians prayed over them.
Motasem al-Batta, his wife and the girl were killed in their tent in the crowded Muwasi area.
"Two and a half months, what has she done?" neighbour Fathi Shubeir asked, sweating as temperatures in the shattered territory soared above 32 degrees.
"They are civilians in an area designated safe."
Israel's military said it is dismantling Hamas' military capabilities and takes precautions not to harm civilians.
It said it couldn't comment on the strike without more details.
Muwasi is one of the heavily populated areas in Gaza where Prime Minister Benjamin Netanyahu has said Israel plans to widen its coming military offensive.
The Israeli military will provide Gaza residents with tents and other equipment starting from Sunday, ahead of relocating them from combat zones to "safe" ones in the south of the enclave, military spokesperson Avichay Adraee said on Saturday.
The mobilisation of forces is expected to take weeks, and Israel may be using the threat to pressure Hamas into releasing more hostages taken in its October 7, 2023, attack that sparked the war.
Families of hostages fear the coming offensive further endangers the 50 hostages remaining in Gaza, just 20 of them thought to remain alive.
They and other Israelis were horrified by the recent release of videos showing emaciated hostages, speaking under duress, pleading for help and food.
A group representing the families has urged Israelis into the streets on Sunday.
"Across the country, hundreds of citizen-led initiatives will pause daily life and join the most just and moral struggle: the struggle to bring all 50 hostages home," it said in a statement.
The United Nations is warning that levels of starvation and malnutrition in Gaza are at their highest since the war began.
Palestinians are drinking contaminated water as diseases spread, while some Israeli leaders continue to talk openly about the mass relocation of people from Gaza.
Another 11 malnutrition-related deaths occurred in Gaza over the past 24 hours, the territory's Health Ministry said Saturday, with one child was among them.
That brings malnutrition-related deaths during the war to 251.
The UN and partners say getting aid into the territory of more than two million people, and then on to distribution points, remains highly challenging with Israeli restrictions and pressure from crowds of hungry Palestinians.
The UN human rights office says at least 1760 people were killed while seeking aid between May 27 and Wednesday.
It says 766 were killed along routes of supply convoys and 994 in the vicinity of "non-UN militarised sites," a reference to the Israeli-backed and US-supported Gaza Humanitarian Foundation, which since May has been the primary distributor of aid in Gaza.
The Hamas-led attack in 2023 killed around 1200 people in Israel.
Israel's retaliatory offensive has killed 61,897 people in Gaza, according to the Health Ministry, which does not specify how many were fighters or civilians but says around half were women and children.
The ministry is part of the Hamas-run government and staffed by medical professionals.
The UN and independent experts consider it the most reliable source on casualties.
Israel disputes its figures but has not provided its own.
