The bombing, which also wounded an American, will likely intensify U.S. pressure on the Palestinian Authority to take action against militant groups. The U.S. Embassy advised U.S. citizens to leave the Gaza Strip after the attack.
If Palestinian militants were to blame, it could signal a dramatic change in strategy. While targeting Israeli soldiers and civilians for years, the main militant groups Hamas and Islamic Jihad not targeted U.S. officials — apparently to avoid a harsh retribution from the Americans and the anger of Palestinian officials trying to work with Washington.
CBS News White House Correspondent Dan Raviv reports President Bush will have to decide, if the bombers are identified, what to do about them: Wait for Yasser Arafat's authorities to arrest them, count on the Israelis to catch or kill them, or order direct American retaliation.
Both Hamas and Islamic Jihad repeated their stance Wednesday that they don't attack Americans, and there was no claim of responsibility for the bombing.
Arafat condemned the attack as an "awful crime" and said he ordered an investigation.
Palestinian Prime Minister Ahmed Qureia denounced the attack. "We strongly condemn this incident and we will conduct an investigation and we will follow it to find the source of this attack," he told reporters in the West Bank. He called Secretary of State Colin Powell to express his condolence and promise swift action.
Israeli officials said the attack underscored the need to dismantle Palestinian militant groups — a requirement of the stalled, U.S.-backed "road map" peace plan that Palestinian leaders have refused to carry out.
"What happened is evidence that no one is immune, unfortunately, to Palestinian terrorism," said Zalman Shoval, an adviser to Prime Minister Ariel Sharon.
The U.S. ambassador to Israel, Dan Kurtzer, said the FBI would send bomb experts to investigate. "We were shocked by this latest terrorist outrage," Kurtzer told reporters. "The United States government will investigate fully."
Kurtzer said the diplomats had been en route to Gaza City to interview Palestinian applicants for Fulbright scholarships. The three dead were security personnel contracted by the embassy, Kurtzer said.
Several hours after the bombing, U.S. investigators arrived at the scene and photographed the mangled van. About a dozen Palestinian youths threw stones at the investigators as about 200 Palestinians looked on.
As the angry crowd chanted "Allahu Akbar" — "God is great" — the Americans rushed back into their cars, surrounded by nervous Palestinian security officers with rifles raised. Palestinian police beat some people in the crowd while pushing the spectators back, and the cars sped away under a hail of stones.
Wednesday's bomb detonated around 10:15 a.m. local time (4:15 a.m. EDT) as the three-car convoy, escorted by Palestinian police, was heading south on Gaza's main road just after entering the Gaza Strip from Israel. In Washington, State Department spokeswoman Brooke Summers said the blast came from a "previously planted explosive device."
After the first two cars — including the police escort — went by, the third car had just passed when the blast went off near a gas station, said Mohammed Radwan, a Palestinian taxi driver who was at the station at the time.
The blast gouged a deep crater into the unpaved stretch of road. The attack tore the van in half and flipped it over, leaving the wreckage twisted with the tires up in the air. The pavement was stained with blood and littered with bits of flesh that were collected by Palestinian paramedics.
An AP reporter saw a gray wire with an on-off switch leading from the scene of the attack to a small concrete room at the side of the road. The blast was about a mile south of the Erez crossing between Israel and Gaza.
U.S. diplomatic sources said the people in the targeted car were security guards for the U.S. diplomats traveling in the other vehicles. Palestinian officials said the diplomats were U.S. monitors.
Israeli counterterrorism expert said it was the first attack on an official U.S. target in the West Bank and Gaza Strip in recent memory.
Attacks on U.S. targets have taken place in other Arab countries, including Lebanon, Saudi Arabia and now Iraq. In October last year, an American administrator for the U.S. Agency for International Development was gunned down in the Jordanian capital, Amman, in an assassination thought linked to the al Qaeda network.
But in the bloody conflict between Israel and the Palestinians, there has been an unofficial policy of "hands-off" the Americans — though 45 Americans, many with dual citizenship, have been caught in the crossfire in the past three years of fighting.
The Palestinian militant Hamas and Islamic Jihad groups, responsible for the bulk of the attacks on Israelis in the past three years of fighting, have said they have no interest in taking aim at non-Israeli targets.
But resentment against the United States has been growing steadily, with many Palestinians complaining that Washington sides with Israel.
U.S. convoys travel in Gaza almost daily, and are easily identifiable — usually bearing diplomatic license plates — and mostly take the same route on the main north-south road in the strip.
Meanwhile, Israel announced orders to expel three Palestinian militants from the West Bank to the Gaza Strip. The decision came after it issued similar orders a day earlier against 15 other Palestinians — raising criticism from the Palestinians and human rights group.