The terrorists entered into Nahariya, and after inadvertently making noise while trying to cross a hedge, they were spotted by a teenager living in a nearby apartment building. His alert prompted two patrolling officers of the Nahariya Civil Guard to rush to the scene. When the terrorists spotted the officers, they threw a hand grenade and opened fire, sparking a gunfight that drew the attention of Israeli security forces.

Major Yitzhak Israel, an Israeli Army officer living nearby, quickly called the police and took defensive actions to prevent the terrorists from entering his building. Local police, as well as reserve Army officers and soldiers in Nahariya, soon arrived at the site. The terrorists were forced into the parking lot of an apartment building, and one of them broke into the building itself. The residents, realizing the danger, barricaded themselves inside their apartments.

During the ensuing chaos, Mordechai Zarnekin, a resident of the apartment building, attempted to save his family. He had his wife Irka, son Gilad, and daughter Ronit escape through a bedroom window using a rope made from sheets. Tragically, as they tried to reach safety, they were spotted by the terrorists, who shot and killed all three of them. Zarnekin himself was accidentally shot by Israeli security forces but managed to return to his apartment, where he hid until he was found by soldiers.

Colonel Shai Tamari initially took command of the security forces on the scene, but Major-General Rafael Eitan, head of the Northern Command, soon arrived and took over. Soldiers from Battalion 12 of the Golani Brigade were called to the scene, with the first unit arriving at 23:50. A fierce gunfight ensued, with terrorists throwing grenades and firing at the soldiers from their positions behind cars in the parking lot.

After consulting with the building's contractor for detailed structural information, Israeli forces formulated a plan for a takeover operation. The operation began at 2:10 am on June 25, with Israeli soldiers storming the building. Tragically, First Sergeant Dan Szenes was killed, and five soldiers were wounded during the assault, when a terrorist threw grenades and fired shots while attempting to open a door. The injured terrorist tried to escape to the roof but was killed by the commando unit commander.

The soldiers continued to sweep through the building, hunting for additional terrorists. During their search, they found and evacuated the wounded Zarnekin. Meanwhile, the two other terrorists hiding in the parking lot were also killed. The operation officially ended at 3:20 am.

In the aftermath, three Israeli civilians—Irka Zarnekin and her children, Gilad and Ronit—and one Israeli soldier, First Sergeant Dan Szenes, had lost their lives. Additionally, seven soldiers and one civilian were injured. This brutal attack was part of a series of guerrilla raids in northern Israel, which had already seen significant violence earlier in the year—including a terror attack in Kiryat Shemonah that killed 18 Israelis and the one in Ma’alot.