The airstrike killed several members of the Popular Resistance Committee, an armed Palestinian faction in Gaza’s southern strip, including the group’s chief.
An Israeli military source confirmed the airstrike in the town of Rafah to MSNBC news services.
The militants were suspected of having crossed from Egypt’s Sinai Peninsula.
The Israeli government blamed Gaza militants for the attacks. Hamas has denied any involvement.
The violence also raised concerns that Palestinian militants were exploiting instability in Egypt, which has increased since the ouster of longtime Egyptian leader Hosni Mubarak.
On Twitter, supporters of Israel and Palestine sparred over who was in the right or wrong: