Yasser Abu al-Naja, whose father is a member of Hamas's military wing, was shot in the head on Friday in border clashes near the southern city of Khan Yunis.
Senior members of Hamas, which rules the blockaded Gaza Strip, and commanders of its Izz ad-Din al-Qassam Brigades attended the funeral.
"Yasser's martyrdom is clear proof of the crimes committed by the (Israeli) occupation against the Palestinian people," said senior Hamas official Khalil al-Hayya during the ceremony.
"The occupiers killed the child in cold blood," said Hayya, a member of the Islamist Palestinian group's political bureau.
The boy was one of two Palestinians killed on Friday by Israeli troops during border clashes in southern Gaza, according to the Palestinian health ministry in the coastal enclave.
His exact age was initially unclear but his family said on Saturday that Yasser was born on September 19, 2006.
The second fatality was identified as Mohammed al-Hamayda, 24, who was shot in the stomach in a separate incident east of Rafah in Gaza's south. A separate funeral was held for him there.
The IDF said thousands of Palestinians took part in "extremely violent riots" on Friday and "committed various acts of terror in several locations" along Gaza's border with Israel.
Troops responded with riot dispersal means and resorted to live fire when those failed.
It said the death of the boy would be investigated.