The Iran-backed Lebanese Shi'ite group Hezbollah on Monday denied its forces had tried to infiltrate the Lebanese-Israeli frontier or that it had engaged in clashes in the disputed Shebaa Farms area.
Hezbollah said in its statement that Monday's incident was "one-sided" and that Israeli forces had "moved nervously on the ground" due to a heightened state of alert.
"There were no clashes or opening of fire from our side in today's events," it said. "Our response to the martyrdom of Ali Kamel (Mohsen)... will surely come."
The group's statement was issued after the IDF said it had "thwarted an infiltration attempt by a Hezbollah terror squad" across a boundary with the disputed region.
According to the IDF, a cell of between three and five men fled back across the border into Lebanon after Israeli troops opened fire at them in the Har Dov region that also borders Syria and is also known as Shebaa Farms.
The pro-Hezbollah al-Mayadeen network based in Beirut reported that a Kornet anti-tank guided missile was fired at Israeli forces. The IDF denied this report and said that no Israeli troops had been wounded in the incident.
The IDF Spokesperson's Unit said: "Tense days lie ahead of us. We understand that there was no anti-tank fire. The incident took place in a shrubbed area and is still ongoing as the IDF is now using artillery fire to cover the Har Dov area. We opened fire on the terrorists from hundreds of meters away."
Earlier, the IDF Spokesperson said that there had been a "security incident" in the area and all residents along the border must remain indoors.
The directive was lifted a short while later and local roads that had been closed at the start of the incident were also reopened.
"Residents of the Galilee and the Golan are returning to normal," the IDF Home Front Command said.
Very large numbers of Israeli troops were being deployed to the area, which is largely unpopulated and from where the Lebanese-based Hezbollah terror group has previously staged attacks on Israel.
Channel 12 television said explosions had been heard in the area. Aerial activity was also reported.
Prime Minister Benjamin Netanyahu and Defense Minister Benny Gantz were updated on the incident during their respective Knesset faction meetings.
Netanyahu ended his meeting, telling Likud lawmakers that Israel was in a "complicated security situation." He and Gantz then headed to the Defense Ministry's Kiriya compound in Tel Aviv for security consultations with IDF Chief of Staff Aviv Kochavi.
Lebanese sources familiar with the incident said that Hezbollah had carried out an operation against IDF troops in the area.
Sources in Lebanon also said that the incident was retaliation by the Iranian-backed group for death of one of its fighters in an airstrike in Syria last week that was attributed to Israel.
Lebanese Prime Minister Hassan Diab was also holding security consultations in Beirut along with President Michel Aoun and the Parliament Speaker Nabih Berri.
The deputy leader of Hezbollah on Sunday dismissed the prospect of an escalation of violence between the group and Israel, despite the increased tensions.
"The atmosphere does not indicate a war ... It's unlikely, the atmosphere of war in the next few months," Sheikh Naim Qassem said in an interview with pro-Damascus television station al Mayadeen.