The sources said Egyptian authorities had begun installing the equipment two days ago with joint US, French and German expertise, and added that they hoped the sensors and cameras would help detect any tunnel construction in the border area.
"Cables that are part of a tunnel detection device are being installed along the Gaza-Egypt border," a security source said, adding the cables were being installed from south of Rafah to the Mediterranean coast.
The source said some cameras and sensors had already been installed, and the cameras would be connected by the cables.
Israel bombed many tunnels during the recent 22-day Gaza offensive in order to prevent Hamas from re-arming. But many tunnels have sophisticated systems and seem to have survived weeks of Israeli bombardment.
Egypt, which has kept its Rafah border crossing with the territory largely closed, has agreed to help stop the tunnel smuggling with international technical assistance.
Egyptian security forces arrested two armed Palestinians as they emerged from a border tunnel with the Gaza Strip on Friday. "Two Palestinian smugglers were caught immediately upon exiting a tunnel in the al-Barahma area of the border between Egypt and Gaza, and they were armed," one source said.
The sources said the detained Palestinians told investigators that seven other Palestinians had crossed earlier on Friday, and Egyptian security forces continued to search the area.