Thousands of people, including Prime Minister Benjamin Netanyahu and President Shimon Peres, participated in the funeral in which the caskets were wrapped with Israeli flags, Xinhua reported.
"The whole nation has witnessed your inner strength and that of the rest of your family," Netanyahu told the bereaved families of Eyal Yifrach, 19, Gil-Ad Sha'ar, 16, and Naftali Frankel, 16, who were kidnapped in the West Bank June 12.
Citing a biblical verse, the prime minister said the three teenagers were attacked by murderers, who violated the decree "never cast a hand on a child".
President Peres talked about the unity of the Israeli people in the past two weeks and said the incident unravelled "the depth of our people and its resolute spirit".
He said he was certain the Israeli security forces will apprehend the killers and Israel will respond harshly.
"Terrorism is a boomerang," Peres said, adding that "it is aimed against us and will hurt those who cast it".
In an another development, Israeli police Tuesday released an audio recording of the phone call made by one of the kidnapped Jewish teenagers shortly after they were captured.
President Peres talked about the unity of the Israeli people
On June 12, the three teenagers were hitchhiking near the Gush Ezion settlement area. That night, Sha'ar managed to make a call to police and notified them that they were abducted.
During the recording, Sha'ar can be heard whispering "I have been kidnapped" in Hebrew.
After that, shouting is heard in Arabic, saying "keep your head down" followed by an instruction to "take the phone away from him".
Israeli security forces and civilian volunteers discovered their bodies Monday, bringing to an end a massive manhunt which saw thousands of troops combing the West Bank and the arrests of over 400 Palestinian suspects, most of them Hamas members.
The bodies were found in the southern West Bank, north of Hebron, between the Palestinian town of Beit Ummar and Halhul, an area controlled by the Palestinian Authority.