Speaking at the American University in Cairo after talks with Hamas leaders from Gaza, Carter said Palestinians in Gaza were being "starved to death", receiving fewer calories a day than people in the poorest parts of Africa.
"It's an atrocity what is being perpetrated as punishment on the people in Gaza.It's a crime... I think it is an abomination that this continues to go on," Carter said.
Israel imposed a blockade on Gaza after the Islamist group Hamas seized power over the impoverished coastal strip last June. Since then, Israel has allowed only basic staples to be transported through the border crossings it controls, into Gaza.
Israel has not accepted Hamas proposals for a truce including an end to Hamas rocket attacks on Israel and to Israeli attacks on Hamas personnel in Gaza and the West Bank. Israeli officials say a truce would enable Hamas to rearm.
Carter said Israel and its ally the United States were trying to make the quality of life in Gaza markedly worse than in the West Bank, where the rival moderate Fatah faction retains power.
"I think politically speaking this has worked even to strengthen the popularity of Hamas and to the detriment of the popularity of Fatah," Carter said, remarking that the U.S. had been trying to achieve the exact opposite.
Carter, who helped broker peace between Egypt and Israel while serving as U.S. president in the 1970s, said the Hamas leaders he has met so far told him they would accept a peace agreement with Israel negotiated by Palestinian President Mahmoud Abbas - the Fatah leader - if the Palestinian people approved it in a referendum.
Israel and the United States say they refuse to deal with Hamas as long as the Islamist movement does not recognize Israel's right to exist and renounce violence.
But Carter said Hamas, which won Palestinian parliamentary elections in 2006, had to be involved in any arrangements that could lead to peace.
"One of the reasons I wanted to come and meet with the Syrians and Hamas was to set an example that might be emulated by others... I know that there are some officials in the Israeli government that are quite willing to meet with Hamas and maybe that will happen in the near future," he added.
Carter's talks in Cairo were with former Palestinian Foreign Minister Mahmoud Zahar and former Interior Minister Saeed Seyam, who did not speak to reporters.
Zahar and Seyam came to Cairo on Wednesday after the Israeli authorities refused to let Carter into Gaza from the Israeli side. Carter has already met a West Bank leader from Hamas and is expected to meet the group's Damascus-based political leader Khaled Meshaal in Syria later this week.
Earlier on Thursday, Carter met Egyptian President Hosni Mubarak. No details were available from either side.