Hassan Nasrallah spoke in a televised address to ceremonies marking Quds Day, an annual occasion created by Hezbollah's ally Iran to show support for the Palestinians. Quds is Arabic for Jerusalem.

"No one has the right to recognize this entity (Israel) or approve its legitimacy," the black-turbaned Nasrallah said in a speech broadcast through a giant screen from a secret location to thousands of supporters who gathered in the group's stronghold south of Beirut.

Nasrallah's comments came hours after President Barack Obama's special Mideast envoy was unable to bridge wide gaps between Israelis and Palestinians on the terms of renewing peace talks. Mitchell had urged the Arab world to take steps toward normalizing relations with Israel as he pressed Israel to halt construction of settlements in the West Bank.

The Hezbollah leader called Israel an "illegitimate cancerous entity" that should be "eliminated." He added that "we will not recognize, deal or normalize with Israel even if the whole world recognize it."

Nasrallah repeated his warning to Israel not to launch a war against his group saying the Israeli military will be "crushed" by his guerrillas. Israel and Hezbollah fought a war in the summer of 2006 that devastated much of south Lebanon. Since then, Hezbollah has refrained from firing rockets into northern Israel.

In neighboring Syria, some 5,000 people marked "Jerusalem Day" at the Palestinian refugee camp of Yarmouk in the capital Damascus.

The head of the Popular Front for the Liberation of Palestine-General Command Ahmed Jibril told the gathering that the participation in the rally is a call "for liberating Jerusalem."

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Associated Press writer Albert Aji contributed to this story from Damascus, Syria.