Palestinian officials say at least two Israeli missiles destroyed a Palestinian security position near the Khan Yunis refugee camp.
Earlier, Israeli soldiers raided the area in the Gaza Strip, killing one Palestinian man and wounding 10. Palestinian hospital officials say Abdel Rahman Abu Bakra was shot and killed by Israeli soldiers during an incursion by Israeli troops into the Gaza Strip. He was identified as an activist in Palestinian leader Yasser Arafat's Fatah movement.
During his funeral, thousands of mourners called for revenge and threatened more suicide bombing attacks against Israelis.
Palestinian security sources say the raid began with Israeli tanks and bulldozers entering the Khan Yunis area in the southern Gaza Strip. They say Palestinian gunmen and Israeli soldiers traded fire during the incursion.
An Israeli army spokesman denied tanks were used during the operation, saying soldiers had "identified a squad of armed terrorists on their way to carry out an attack."
Israel charges that Palestinian gunmen from Khan Yunis have fired on Jewish settlements in Gaza.
Israeli forces have stormed into Palestinian-controlled areas of Gaza in pursuit of militants or to tear down houses and buildings being used for cover by gunmen. The incursions into Palestinian-ruled areas have drawn international criticism.
The Israeli military continues to maintain a tight closure on the Palestinian territories as police warn of more suicide bombings against Israeli targets.
"We do have precise information that terrorists from the Hamas and the Islamic Jihad are on their way to try and attack us in the midst of our cities," said Avi Pazner, an Israeli government spokesman.
Israeli security sources say they prevented an attack on a nightspot in the coastal city of Haifa. Two militants from the Islamic Jihad group were arrested carrying a bomb packed with 10 kilograms of explosives, nails, and pieces of metal.
The increased security follows two recent suicide bombings in Haifa and Jerusalem. Along with the bombers, 15 people died and more than 100 were injured in the two attacks.
More than 700 people, mostly Palestinians, have been killed since the uprising against Israeli occupation began last September.