Most hospital staff and many relatives of patients who had sought shelter there also fled on foot, as tanks and armoured bulldozers surrounded the building.
About 120 patients, including premature babies, had to stay behind and were being cared for by a skeleton staff.
Those who left, including the sick and injured, walked through rubble-strewn streets - but it is unclear where they will go as more than half of Gaza's 35 hospitals are no longer operational.
Journalist Khader Al Zaanoun said: "We raised our hands and carried white flags.
"Last night was very difficult. The sounds of explosions and gunfire were terrifying.
"The bulldozers created huge holes in the hospital yard and swept away some buildings."
Irish-Palestinian plastic surgeon Dr Ahmed El Mokhallalati said he and five other doctors are staying behind, adding: "Many patients cannot leave the hospital as they are in the ICU beds or the baby incubators."
It was claimed Israeli forces used loudspeakers to tell those in the hospital they had to leave "in the next hour" yesterday morning but Israel Defence Forces denied ordering the evacuation.
It added that it had continued to provide food, water and humanitarian aid to the hospital.
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