The body of a guard assigned to the American-Israeli, Edan Alexander, had been recovered from the site of a recent Israeli strike, Hamas's armed wing the Ezzedine Al-Qassam Brigades said in a statement.
Hamas on Thursday signalled its rejection of the plan, which would have involved Alexander.
He is among the dozens of living and dead captives still held in Gaza, 18 months after Hamas's war with Israel began, and weeks into a renewed Israeli offensive that rescuers in Gaza said killed 54 people on Saturday.
On Tuesday, Hamas announced it had “lost contact” with the militant unit holding Alexander following an Israeli air strike on their location in the Gaza Strip.
The Brigades on April 12 released a video showing Alexander alive, in which he criticised the Israeli government for failing to secure his release.
Of the 251 hostages taken during the attack, 58 remain in captivity in Gaza, including 34 the Israeli military says are dead.
Soldier killed
Rejecting a new truce proposal, Hamas's chief negotiator Khalil al-Hayya on Thursday said the Islamist group sought a comprehensive deal including “halting the war” and an Israeli withdrawal from Gaza.
Since Israeli forces resumed their offensive, at least 1,783 people have been killed in Gaza, according to the Hamas-run territory's health ministry.
Also on Saturday, the Al-Qassam Brigades released a video showing an Israeli hostage alive in Gaza.
In the footage, Bohbot is seen speaking in Hebrew into a landline telephone, urging a friend to take his wife to the White House to meet US President Donald Trump in an effort to secure his release.
The hostage forum released a statement from his family who were “shocked and devastated” after the video release.
Israelis rallied in Tel Aviv on Saturday night in a regular ritual calling for a deal for the hostages’ release, a stance reiterated by the forum, which accused Netanyahu of having “no plan” for securing the captives’ freedom.
Hamas's October 7 attack resulted in the deaths of 1,281 people on the Israeli side, mostly civilians, while Israel's military offensive since then has killed at least 51,157 people in Gaza, also mostly civilians, according to data from both sides.
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