Katz said if Hamas does not release the hostages by the time US President-elect Donald Trump takes office, a "plan for the total defeat of Hamas in Gaza" would be implemented.
He directed the military to "identify potential obstacles to implementing the plan, including humanitarian concerns and other issues," so the political leadership could make the "necessary decisions."
Katz made the instruction during a security assessment meeting on Thursday with Israel Defense Forces (IDF) Chief of Staff Herzi Halevi, Xinhua news agency reported.
He called for delivering a stronger blow to Hamas rather than engaging in a "war of attrition."
Katz stated that the "complete defeat" of Hamas should be pursued independently of Gaza's reconstruction plans after the war. "Any political resolution is irrelevant to the current plan and required actions, as no Arab or other entities would take responsibility for managing civilian life in Gaza until Hamas is completely dismantled," he added.
The remarks came amid a new round of talks in Doha, Qatar, aimed at reaching a ceasefire in Gaza and freeing the remaining Israeli hostages held there.
Israel launched a large-scale offensive on the Gaza Strip in October 2023, following a Hamas-led assault on southern Israel that killed about 1,200 people and took about 250 hostages. Israel stated its goal is achieving a "total victory" over Hamas and securing the release of the hostages. Since then, over 46,000 Palestinians have been killed in the enclave, according to Gaza health authorities.