State TV said the dawn strikes had targeted camps, training sites and weapons storage areas.
Libyan officials said Egypt had hit targets in the militant-held city of Derna in co-ordination with Libya.
A video emerged on February 15 showing militants forcing a group of men to the ground and decapitating them.
Islamic State militants claim to have carried out several attacks in Libya, which is in effect without a government.
The kidnapped Egyptian workers, all Coptic Christians, were seized in December and January from the coastal town of Sirte in eastern Libya, under the control of Islamist groups.
The video of the beheadings was posted online by Libyan jihadists who pledge loyalty to ISIS. The victims were all wearing orange overalls as in previous videos of ISIS executions. It was one of the first such videos to come from an ISIS group outside its core territory in Syria and Iraq.
Egypt did not give the locations of the strikes, but reports said that Egyptian jets had taken part in co-ordinated air strikes on Derna.
Libyan Air force commander Saqer al-Joroushi told Reuters that Libyan planes had bombed targets in Sirte and Bin Jawad.
Earlier, President Abdel Fattah al-Sisi said Egypt had the “right to respond” against ISIS, whom he described as “inhuman criminal killers”.
“Egypt and the whole world are in a fierce battle with extremist groups carrying extremist ideology and sharing the same goals.”
Egypt has declared seven days of national mourning.
Leading international condemnation, the United States called the killings “despicable” and “cowardly”.
Libya is home to a large community of both Muslim and Coptic Egyptians, with most working in the construction sector.
In the first kidnapping in Sirte, in late December, a group of Coptic Christians was abducted at a fake checkpoint while trying to leave the city.
Days later, militants raided a residential compound in Sirte and separated Christians from Muslims before handcuffing their captives and taking them away.
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