No group take responsibility of attack.
As Worshippers finished Friday prayer at the mosque when a bomb exploded, locals said. Around 45 gunmen set positions outside the mosque with vehicles and opened fire from different sides as people tried to escape.
State media showed images of bloodied victims and bodies covered in sheets inside the Al Rawdah mosque in Bir al-Abed, west of El Arish,A main city in North Sinai.
"Five groups of armed mens attacked the worshippers inside the mosque after Friday noon prayers. Three groups were firing at ambulances to deter them, said Mohamed, a witness.
The public prosecutors' office said in a statement 240 people had been killed and 114 more wounded.
Hours after the attack, Egypt's military launched air strikes on targets in mountainous areas around Bir al-Abed, security sources and local said.
"What is happening is an attempt to stop us from our efforts in the fight against terrorism, to destroy our efforts to stop the terrible criminal plan that aims to destroy what is left of our region."
Striking at a mosque would be a change in tactics for the Sinai militants, who have usually attacked troops and police and Christian churches.