JERUSALEM (AP) _ The militant Islamic group Hamas claimed responsibility today for a terror attack in which two Arabs armed with assault rifles and hand grenades opened fire on a street crowded with outdoor cafes, killing two people and wounding 13 before being cut down.

The Palestinian attackers killed an off-duty Israeli woman soldier and a Palestinian bystander. One of the wounded was a U.S. diplomat, identified by the U.S. Embassy in Tel Aviv as Scott Dobberstein, 33, of Gary, Minn. Dobberstein was hit by grenade fragments.

Police and private citizens with handguns returned fire and the two assailants, who wore red bandannas and carried AK-47 Kalashnikov rifles, fell dead in the stone-paved Yoel Solomon Street shortly before midnight.

U.S. Secretary of State Warren Christopher called on PLO leader Yasser Arafat to reaffirm his commitment to the peace process by strongly denouncing the attack and acting ''as firmly as he can against that kind of incident.''

''I think Chairman Arafat should respond and condemn it strongly,'' Christopher said. ''That is part of his commitment.''

Prime Minister Yitzhak Rabin, who has threatened to slow the expansion of autonomy for Palestinians unless Arafat reins in the militants, said ''we will fight Hamas with all our might and will not let them harm the peace process.''

Faisal Husseini, the PLO's spokesman on Jerusalem affairs, condemned the killings on Israel radio, saying the PLO was against the ''killing of civilians, whether Israelis or Palestinians.''

He called for expansion of Palestine Liberation Organization authority in the West Bank as a way to stop attacks and contended the PLO was doing all it could to prevent violence. ''We cannot have full security when we do not have full control,'' he told The Associated Press.

Angry Israelis gathered at the shooting site today as shopkeepers and cafe owners swept up glass and children gathered around a tree trunk to dig out a bullet. Some cafes reopened and served breakfast.

Youths shouted slogans against Rabin for making peace with the Palestinians. ''Rabin go home,'' shouted a group of about 20 teen-agers.

In a leaflet sent to news agencies today, the Muslim fundamentalist group Hamas said the attack came in revenge for the Oct. 8, 1990, shooting of 17 Palestinians by Israeli police during clashes outside Jerusalem's Al Aqsa Mosque.

''Our bold military operations will not cease as long as there is an Israeli soldier left on our occupied land,'' the Hamas leaflet said.

The leaflet identified the assailants as Hassan Abbas from the Gaza Strip and Issam Muhana Ismail Jawhari from Egypt.

Israel radio said Jawhari was a PLO policeman who arrived from Egypt recently. PLO police denied Jawhari was a policeman, and Hamas officials said Jawhari, 24, was an Egyptian national who came to Gaza on a tourist visa in July and frequented the Sheik Radwan mosque, a center of Islamic militants.

Abbas, who spent two years in jail for being a Hamas activist, was the former driver of Imad Aql, a Hamas leader killed by Israeli soldiers last year, Palestinian and Israeli sources said.

The attack Sunday coincided with the arrival of Christopher, who was in the King David Hotel a few blocks away at the time of the shootings. A security alert was ordered and the hotel was sealed off for the rest of the night and into the morning, snarling Jerusalem traffic at rush hour.

The gunmen opened fire at 11:30 p.m. Sunday in a crowded downtown pedestrian mall lined with restaurants. Witnesses said fewer people than usual were sitting outside because it had rained earlier in the evening.

''It's our worst nightmare come true,'' said Keith Sprague, an immigrant from New York City, who spoke to a reporter in the Amigos Mexican restaurant littered with broken glass and scores of shell casings.

Sprague, a security guard who was armed with a 9mm pistol, said he herded the customers to the roof shortly before the gunmen holed up inside the restaurant. ''They left the restaurant and were killed,'' he said.

Police spokesman Avi Zelba said the Palestinian gunmen fired hundreds of bullets in the attack. Police also said they found seven grenades at the scene.

Christopher confirmed a U.S. diplomat was among the wounded. He described the diplomats wounds as ''light.'' U.S. Embassy Spokesman David Good said the American was a housing specialist at the embassy in Tel Aviv.

Also among the injured was an 18-year-old American woman who was treated for shock.

After the attack, the body of one attacker was wedged behind a large flower pot that was smeared with blood. The other lay sprawled on the street. Both had been hit in the face and chest by multiple rounds.

Orthodox Jews in black coats and hats beat the body of one attacker with their fists.

''This is the fruit of peace?'' asked Amir Shoam, an off-duty soldier who witnessed the attack.

Yehuda Levi, 40, was sitting in a cafe with a friend when the shooting began. He said that his friend was seriously wounded by three shots to the stomach, leg and hand.

''What I remember is that there were a lot of shots, and something fell on my leg,'' he said, his leg bandaged as he sat in a hospital emergency room.

''We tried to run into the kitchen of the cafe. I succeeded. He did not.''

Orly Yoskovitz, an off-duty prison officer, told President Ezer Weizman who visited the scene that she shot one gunman with her Baretta pistol.

''We saw two and shot at them. We hit him,'' she told Weizman, drawing her pistol to show him the weapon.

Before Sunday's attack, 62 Israelis had been killed in attacks by Palestinians since the Israel-PLO accord was signed in September 1993.