Chief of Staff Gadi Eisenkot, speaking to a security conference, said intelligence had led Israel to the conclusion and matched previous reports.
Hezbollah itself has said Mustafa Badreddine, who was on a US terror sanctions blacklist and wanted by Israel, was killed in an explosion in May 2016 near Damascus international airport.
A probe had concluded that Sunni Islamist radicals known as "takfiris", who consider Shiites to be heretics, had killed Badreddine, according to Hezbollah.
Eisenkot said Israel "believes that he was killed by his own officers".
"Those findings show to what degree relations between Hezbollah and its patron Iran are tense and complex," he said.
Hezbollah has deployed thousands of fighters in Syria, where Badreddine had led its intervention in support of President Bashar al-Assad's forces, which are also backed by Russia and Iran.
The Shiite movement has said Badreddine was killed by artillery bombardment of one of its positions near Damascus airport.
It did not name any specific Islamist group, and there has been no claim of responsibility for the killing.
Badreddine was a key suspect in the 2005 assassination in Beirut of Lebanese ex-premier Rafiq Hariri.
His predecessor, cousin and brother-in-law Imad Mughniyeh was killed in Damascus in a 2008 bombing that Hezbollah blamed on Israel.
Israel considers Hezbollah among its top threats and fought a devastating 2006 war against it.
Its military believes Hezbollah has between 100,000 and 120,000 short- and medium-range missiles and rockets, as well as several hundred long-range missiles, with the medium-range missiles capable of reaching Tel Aviv.
Israeli military officials have said regularly in recent months that they will respond with heavy force against Lebanon if Hezbollah were to attack from there.
However, many analysts say the Lebanese militia's involvement in Syria has made another conflict with Israel less likely for now.
While Israel has sought to avoid being dragged into Syria's civil war, it acknowledges carrying out air strikes there to stop deliveries of advanced arms to Hezbollah.
On Friday, Israeli warplanes struck several targets in Syria, drawing retaliatory missile fire in the most serious incident between the two countries since the start of the Syrian civil war in 2011.
Israel also used its Arrow interceptor to destroy what was believed to have been a Russian-made SA 5 missile.
On Sunday, Israeli Defence Minister Avigdor Lieberman threatened to destroy Syria's air defence systems "without the slightest hesitation" if it happened again.
Russian involvement in Syria has complicated Israel's actions.
Israeli Prime Minister Benjamin Netanyahu and Russian President Vladimir Putin have held a series of talks on avoiding accidental clashes, and a "hotline" has been set up between the two countries.
However, Russia's foreign ministry on Monday acknowledged it had summoned Israel's ambassador over Friday's air strikes, which were close to Moscow's forces near the historic Syrian city of Palmyra.
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