During the operation, the soldiers spotted a number of gunmen, attacked them and identified a hit. The force hit and killed another gunman in a later exchange of fire.
Two IDF soldiers were lightly injured as gunmen fired an antitank missile at a bulldozer. The troops were evacuated to the Sororka Medical Center in Beersheba.
The al-Quds Brigades, the Islamic Jihad's military wing, claimed responsibility for firing the missile.
Palestinian sources reported that an elite force entered the Strip at around 3 am and besieged a number of buildings in the al-Maghazi and al-Bureij refugee camps. They said that the soldiers encircled a number of houses and took over other houses.
The Palestinians reported that one of the men killed in the raid was Muhammad Siam, a local commander of the Izz al-Din al-Qassam, Hamas' military wing.
Givati and armor forces took part in the raid and have so far hit five terrorists. The force was operating about one kilometer inside the central Strip.
Army sources reported that the raid was similar to the IDF's recent activities, aimed at operating between the border fence and the populated area in the Strip and thwarting terror attacks, such as the foiled kidnapping attempt in Kissufim last month.
The soldiers are searching for tunnels and explosives and taking in Palestinian group members for questioning. Such an operation usually takes between 12 to 24 hours, after which the forces leave the Palestinian territory.
13 wanted Palestinians arrested in West Bank
Sources at the Southern Command said that "the current activity, like our previous activities across the Strip, is defensive, not offensive. We cannot remain indifferent to the terrorists' plans to carry out terror attacks on the fence or beyond the fence. Terror organizations have motivation and abilities, and therefore we operate according to our evaluations of the situation in different areas in the Strip.
IDF officials explained that the ground operation, as well as the Southern Command's operation with the Air Force and additional secret operations, are all aimed at thwarting terror attacks from Gaza.
Seven Palestinians were killed in the same area on Saturday in two separate Israel Air Force strikes. One of the casualties was identified as Salah Kopah, a senior group member in the Strip.
The Palestinians reported that the other casualties were members of the Shahid Ayman Jouda cells, which took part in a terror attack carried out recently by the Islamic Jihad in Kissufim. Members of the al-Quds Brigades, the Islamic Jihad's military wing, were also killed in the attacks.
Meanwhile Wednesday night, IDF soldiers arrested 13 wanted Palestinians across the West Bank.
Six Palestinians were detained in the Hebron area. In the Bethlehem area, soldiers arrested four suspects, three of them Hamas members and the other an Islamic Jihad members. Two Islamic Jihad members were detained in the Jenin area, while a Hamas member was arrested in Ramallah.
Ali Waked contributed to the report