The Israel Defense Forces (IDF) said 19-year-old Cpl Noa Marciano was discovered in a building next to the Al-Shifa Hospital.
On Thursday, the IDF said theyfound the body of a 65-year-old hostage in a house near the same hospital.
Troops are continuing their search in and around Gaza's biggest hospital.
A spokesman for the IDF, Daniel Hagari, wrote on the social media platform X, formerly Twitter, that Israeli intelligence led soldiers to the exact location of her body.
The IDF did not give further details on how Cpl Marciano died.
Hamas's military wing claimed she was killed in an Israeli air strike on 9 November, though this could not be independently verified.
Cpl Marciano was serving as a lookout at the Nahal Oz kibbutz when it was stormed by part of a wave of gunmen who had burst through the nearby Israel-Gaza border, attacking dozens of Israeli communities, several military bases and hundreds of young people attending a music festival.
According to Haaretz, Cpl Marciano's mother, Adi Marciano, said in an interview that she last spoke to her daughter on the morning of the attack.
"She told me she was in a protected space and that there had been an infiltration... She said that she had to end the call. I didn't hear shots or screams. Half an hour later, I sent her a message, but she didn't reply."
She had appeared in a video released by Hamas on Monday. The IDF called it "psychological terrorism".
So far, only four of the 240 hostages who were abducted by Hamas last month have been freed.
Israeli officials say that at least 1,200 people were killed in Hamas's cross-border attack.
Since Israel started its counter-attack, Gaza's Hamas-run health ministry has said 11,400 people have been killed in the territory.
Al-Shifa, Gaza City's largest hospital, became the focus of fighting at the start of the week and was raided by the Israeli military on Wednesday morning.
The IDF says Hamas has been using the hospital as a command centre and has spent two days searching the complex for evidence of this. Hamas denies operating there and the BBC cannot independently verify claims by either side.
Israel has confirmed that it has found the body of a second woman who was taken into Gaza by Hamas in its attack last month.