Israeli soldiers stormed the police post in al-Zahra late Saturday night, arresting officers they found inside and seizing their weapons, locals said. They did not say how many police had been detained.
The Israelis then blew up the post, Aljazeera's correspondent reported.
Israeli tanks had entered the area, about two kilometres south of Gaza City, firing from submachine guns, Palestinian security forces told AFP.
But although Israeli military sources confirmed the al-Zahra attack, they denied police officers had been arrested.
"No one was found inside the police post," Israeli sources said. "It is an operation targeting terrorist infrastructures in the Netzarim sector.”
However, Israeli military sources had earlier denied the raid altogether.
Israeli tanks have also set up a roadblock just south of Gaza City, on the main road running the length of the Gaza Strip, the sources added.
The al-Zahra raid follows clashes at dawn on Friday, when three Israeli soldiers were shot dead and two others were wounded in nearby Netzarim, a Jewish settlement in the northern Gaza Strip.
A Hamas fighter at a rally in Gaza
after Friday's attack on Netzarim
The attack was claimed jointly by the Palestinian armed groups Hamas and Islamic Jihad. Hamas fighter Samir Fuda, 22, from Jabalya refugee camp, was killed, and his Jihad co-assailant escaped.
A military official said the fleeing Islamic Jihad fighter received shelter at the police station and policemen helped him to escape the area.
The Netzarim attack came days after a high-level meeting in
In Qabatiya, in the northern West Bank, three Palestinians, including an 10-year-old child were wounded by Israeli fire.
Syria between the leader of Islamic Jihad, Ramadan Shallah, and senior Hamas leader Khaled Mashal in which they agreed to enhance "field cooperation".
Troops were attacked by stone throwers when they staged an incursion into the area, Palestinian hospital sources said.