Though he declined to address the latest Mideast violence during a Medicare speech in Chicago, the president spoke angrily afterward as he prepared to board his Marine One helicopter.
"It is clear there are people in the Middle East who hate peace, people who want to kill to make sure the desires of Israel to live in secure peace don't happen," he said.
"For the people in the world who want to see Mideast peace, I strongly urge all of you to fight off terror," Bush pleaded.
The president also urged all parties to cut off funding to terrorist groups.
Earlier in the day, the White House issued a statement condemning the homicide bombing. At least 16 Israelis died in the afternoon rush hour attack. About 100 more were injured.
Bush was informed of the explosion, the latest effort to disrupt the peace talks and negotiations, as he traveled on Marine One to the speech.
"The president condemns the attack in the strongest possible terms," Bush spokesman Scott McClellan said.
Sens. John Cornyn, R-Texas, and Mark Pryor, D-Ark., also condemned the bus attack.
"There was great hope just last week and this, of course, is a terrible disappointment and seems like the violence just keeps spiraling downward," Cornyn said, referring to Bush's meeting last week in Aqaba, Jordan, with Palestinian leader Mahmoud Abbas (search) and Israeli Prime Minister Ariel Sharon (search).
The discussion, aimed at reinvigorating the peace process and producing a settlement between the two sides, had been lauded as a possible fresh, new start.
"We know now there has been an election and we're hopeful that Abbas will be a very positive influence in that situation but it's very hard to know. One thing I think we need to remember is that when we look back ... there is always an increase in violence as peace draws closer," Pryor said.
The terrorist group Hamas (search) took credit for arranging the homicide bombing; the bomber dressed as an Orthodox Jew in order to board the bus. Hamas had vowed to take revenge for Israel's botched missile attack Tuesday on Abdel Aziz Rantisi, a leader of Hamas who was wounded in the leg.
Hamas issued a statement saying that the bombing "is a message to all the Zionist criminals that they are not safe and that the Palestinian fighters are capable of reaching them anywhere."
Sources told Fox News that Israel had intelligence of an impending attack and had set up security around Jerusalem's bus stops, but they couldn't stop the bomber.
In response, about an hour after the attack, an Israeli military helicopter launched a successful gunship attack on two other Hamas leaders. Several Palestinians were also killed and about 27 injured in the operation.
On Tuesday, Bush said Israel's helicopter attack on the Hamas leader could make it harder for the new Palestinian leadership to combat terrorism and made no contribution to Israel's security -- some of his administration's strongest words against Israeli actions to combat Palestinian terrorism.
Bush said he was troubled by the Israeli attack in Gaza and was "determined to keep the process on the road to peace."