An Israeli aircraft fired at Gaza militants about to launch rockets at Israel, killing two in the deadliest cross-border fighting in three months.
Israel's military held Gaza's Hamas rulers responsible, saying in a statement that the Islamists are "not enforcing a policy of restraint over the terrorist organizations operating in the Gaza Strip."
In a separate incident, Gaza militants fired at an army vehicle patrolling along the border in southern Gaza, lightly wounding the driver, the army said.
Relatives of the dead men said they were civilians, and local militant groups did not claim responsibility.
But Israeli media, quoting anonymous military officials, said they were believed to be members of a small armed faction inspired by al-Qaida. A militant website with links to the global terror network said the men were part of a group called "Tawhid."
Several Qaida-inspired groups have sprouted up in Gaza in recent years. They consider Hamas as too moderate, despite the ruling group's militant ideology. Hamas has tried to both crack down on the radicals and co-opt them.
Hundreds of people have been killed in fighting along the Israel-Gaza border in recent years. The most fighting took place in March, with militants firing rockets and heavy mortar barrages at Israel and Israel retaliating with airstrikes. Nineteen Palestinians were killed by Israeli airstrikes over a two-day stretch in the second week of April after Gaza militants fired a rocket at an Israeli school bus. Egypt's new government brokered an informal cease-fire later in April.
Both Israel and Hamas have largely honored an unofficial truce since April. Although Hamas did not appear to be connected to Tuesday's incident, the bloodshed could nonetheless spark new fighting in the territory.
Israel says that since Hamas governs Gaza, it is responsible for any attacks emanating from the territory. Hamas could also feel compelled to avenge the Palestinian deaths.
A new round of violence could also add new uncertainty to reconciliation efforts between Hamas and the rival Fatah movement.
The groups, which oversee rival governments in the Gaza Strip and West Bank, pledged in May to form a single caretaker government to prepare the way for new elections. Those efforts, stalled because of disagreements over choosing a prime minister, would become further troubled if Hamas is battling Israel.
A renewal of fighting would also create new obstacles in efforts to win the release of Sgt. Gilad Schalit, a captured Israeli soldier held by Hamas for five years. Hamas has demanded that Israel release hundreds of Palestinian prisoners in exchange for Schalit.
Early Tuesday, Israeli Defense Minister Ehud Barak called off the impending transfer of the remains of 84 Palestinian militants from an Israeli grave site to the West Bank, saying he didn't want to jeopardize efforts to free Schalit.
Barak announced his decision just hours after the military confirmed plans to hand over the remains.
Barak did not elaborate. But Israel might fear the handover would embolden Hamas to raise its price for the soldier's freedom. And politicians have criticized the deal because it did not ensure that Israel would even receive any information about Schalit in return.
(This version CORRECTS Corrects that it was the deadliest fighting in three months, not two months, adds background)