According to the local police, gunmen arrived in four off-road vehicles and bombed the mosque.
The attack occurred in the village of Rawda in Beir el-Abad, 40 km from Arish, the source added.
The target: The mosque is known for being the birthplace of Sheikh Eid al-Jariri, a Sufi cleric considered the founder of Sufism in the Sinai Peninsula.
Sissi called the attack "criminal", and "cowardly". "This terrorist act will strengthen our resolve, steadfastness and will to stand up to, resist and battle against terrorism".
"What is happening is an attempt to stop us from our efforts in the fight against terrorism, to destroy our efforts to stop the bad criminal plan that aims to destroy what is left of our region", Egypt's President Abdel Fattah el-Sisi said. "The world can not tolerate terrorism, we must defeat them militarily and discredit the extremist ideology that forms the basis of their existence!" "God bless the people of Egypt", he tweeted. Our condolences & prayers are with the victims & their families.
An Egyptian television channel reported that President Abdel Fattah al-Sisi will meet with security officials later today to discuss the attack. "India resolutely supports the fight against all forms of terrorism and stands with the people as well as Government of Egypt", PM Modi said.
French Ambassador to Egypt Stéphane Romatet also condemned the terrorist attack, describing it as brutal and shameful.
Resident Ashraf el-Hefny said numerous victims were workers at a nearby salt factory who had come for Friday services at the mosque.
Prime Minister of Georgia, Giorgi Kvirikashvili: "Our most honest condolences to the families of victims, the Government and the people of Egypt and everyone affected by the heinous attack on the mosque in Sinai". "On behalf of the United Kingdom my deep condolences to all involved", he twitted.
He stressed that Islam has nothing to do with such terrorist attacks, adding that the perpetrators have no human values and principles.
Egypt later said it would delay the opening of the Rafah border crossing to Gaza after the attack due to security concerns.
Grand Imam of Al Azhar Ahmed al-Tayeb denounced the attack and stressed the importance of working to eliminate terrorists.
Militants have tried to expand their operations into Egypt's heavily populated mainland, hitting Coptic Christian churches and pilgrims.
No one immediately claimed responsibility for the attack. Over 230 people were killed and 130 more wounded in the attack by suspected Islamic State (IS, formerly ISIS/ISIL) militants.