Military spokesman Colonel Tamer El-Rafei read the army statement "Communique 1 from the General Command of the Armed Forces" on state TV, which announced the launch of the operation.
The insurgency by Islamist extremists there increased in 2013 following the ousting of the country's first democratically elected president, Mohamed Morsi.
The military operation is meant to cover large parts of the Sinai peninsula, as well as parts of the Delta and the Western Desert, the military spokesman said.
Warplanes will bomb areas where jihadists are hiding while troops, tanks and armored vehicles will be deployed on the ground, security sources said.
Police and troops have been put on "maximum alert" for the duration of Operation Sinai 2018, which also involves the air force and navy, the Egyptian Army said. Since then, the Wilayat Sinai, the ISIL branch in Egypt, has claimed responsibility for a number of deadly attacks in the area.
In a subsequent statement, el-Rifaai said the air force carried out airstrikes on militant hideouts in north and central Sinai.
Egypt has been under a state of emergency since April a year ago, after two suicide bombings at churches claimed by Daesh killed at least 45 people in the cities of Tanta and Alexandria.
Maritime personnel insurance procedures are also tightened up by elements of the naval forces, with a view to cutting off the supply lines for terrorist elements. The army's spokesperson announced the operation in a televised statement.
Egypt closed its border with Gaza on Friday, a day earlier than planned, Palestinian officials said, after the anti-jihadist operation began.
In 2014, Islamic State in the Sinai province, formerly known as Ansar Al-Bait Al-Maqdis, pledged its allegiance to the ISIS leader Abu Bakr al-Baghdadi, hitting out in a series of high profile attacks including the October 2015 downing of Metrojet Flight 9268.
In November, President Abdel Fattah El Sisi, who is seeking re-election in polls next month, ordered the armed forces chief of staff to restore security in Sinai within three months after militants killed more than 300 worshippers at a mosque.
The comprehensive anti-terror operation comes weeks before Egypt starts its 2018 presidential elections, where incumbent President Sisi is expected to make an easy win for a second term due to the lack of strong challengers in the race.