Thabet al-Hamami pitched a tent by the ruins of his home – one of 60,000 totally or partially destroyed by Israeli strikes during the recent conflict – and offered sweets to relatives and friends.
"We will celebrate the feast, no matter what," his son Naeem said.
The seven-week war that ended with a truce on August 26 killed nearly 2,200 Palestinians, mostly civilians, and 73 on the Israeli side, most of whom were soldiers.
It caused huge destruction to homes and infrastructure, leaving more than 100,000 Palestinians homeless in the long term, according to the United Nations.
In the eastern Gaza district of Shejaiya, where entire apartment blocks were flattened in some of the heaviest bombardments of the conflict, children gathered around a butcher slaughtering a sheep for Eid.
But only two sheep and a cow were available, donated by a charity. The meat will be distributed to the poorest residents of the coastal enclave.
The sacrifice of sheep or other animals for Eid al-Adha is a re-enactment of the story of Abraham, who was prepared to fulfil God's command to sacrifice his own son.
Flanking Israel and Egypt, the Gaza Strip is home to 1.7 million Palestinians who live in just 362 square kilometres (140 square miles), making it one of the most densely-populated territories on the planet.
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"We don't feel the holiday but we are trying to bring some joy into the hearts of the children of our martyrs," said Mohammad Sukkar, as handed out just dates and coffee to well-wishers.
"The economic situation is dire," said Karam al-Batsh who runs a charity organisation that bought sheep with money from donors.
Some of the Palestinian factions in the Strip have also distributed meat to the homeless and to families who lost a loved one in the war, he added.
Early on Saturday, thousands of Gazans headed to mosques for special Eid prayers before going to cemeteries to pray for their dead.
Nine-year-old Majd Dahduh clutched a bouquet of flowers as he knelt by the grave of his father at the Sheikh Radwan Martyrs Cemetery and said softly: "Happy Eid, father."
"He used to bring us presents for the Eid and we used to go with him to the mosque to pray. Now he is in heaven," he said, sobbing.
His father, Shaaban Dahduh, was a top commander of the Islamic Jihad group who was killed in an Israeli attack that targeted an eight-storey apartment bloc.
"He meant everything for us and we are proud of him," said his widow.
Former Hamas prime minister Ismail Haniya also delivered a speech to mark Eid stressing the need to rebuild the Strip.
He pledged Hamas "will continue to bolster and develop its resistance until the land has been liberated" from Israeli occupation.
Islamic Jihad official Khodr Habib, in a separate speech, told worshippers "we will celebrate despite the destruction. The enemy will not rejoice in killing our happiness."