Palestinian sources reported that the two were identified as Aiman Pesaifas and Ahmed Tabash.
IDF officials said a reserve duty force encountered the two operatives, opened fire towards them and killed them. Ammunition including hand grenades and explosive devices were found in their possession.
On Wednesday two Palestinians were killed and three others were injured from a missile fired in their direction by an Israeli aircraft. The missile was apparently aimed at an Islamic Jihad cell responsible for the recent launching of Qassam rockets from north Gaza toward the western Negev region.
Israel's new strategy to deter the Palestinians from firing rockets from the Gaza Strip will be to gradually cut off Gaza electricity as a pressure tactic each time a Qassam rocket is fired at Israeli territory.
Israel provides more than half of Gaza's electricity, and any power cut-off would make life more difficult for residents of the already impoverished territory.
The cut-off would begin with short periods and gradually increase, defense officials said, but it would not result in a total blackout.
Israel's government last month declared Gaza a hostile territory, clearing the way for Israel to impose the sanctions.
Ali Waked and AP contributed to the report