They said the 41-year-old man was hit by an Israeli tank shell outside his home near the town of Khan Younis.
An Israeli military spokeswoman said Givati Brigade and Armored Corps forces operating in the area opened fire at a local gunman and hit him.
Several mortar shells were said to have been fired at the forces during the raid.
On Saturday, Palestinian sources in the Gaza Strip reported that Nafez Mansur, 40, a senior operative of Hamas' military wing, was killed in an IAF strike on the southern Gaza Strip town of Rafah.
The IDF confirmed the strike, saying that Mansur was believed to have been involved in the abduction of Gilad Shalit in June of 2006, as well as in the failed infiltration attempt in Kerem Shalom, just before Passover. The strike was a joint IDF-Shin Bet operation.
Hanan Greenberg contributed to the report