It was the most serious internal Palestinian violence to erupt since Hamas defeated the long-dominant Fatah faction in a January election and formed a government.
Medics said three gunmen, two from Fatah and one from Hamas, were killed in the fighting near the town of Khan Younis and several other participants in the battle were wounded.
The clash broke out after Hamas accused Fatah of having kidnapped three of its members, security officials said.
Last month, 20 people were wounded in fighting between Hamas and Fatah supporters in Gaza after exiled Hamas leader Khaled Mashaal condemned Chairman Mahmoud Abbas' veto of a new security force, formed by Hamas and headed by a top terror activist.
Abbas met on Saturday with Prime Minister Ismail Haniyeh in a failed bid to resolve disputes over security and end an international financial boycott threatening to bankrupt the Hamas-led government.