One person inside the vehicle, believed to be a member of Hamas, was wounded in the attack on Tuesday evening. Witnesses told Aljazeera they saw two people escape from the car.
It was the second Israeli missile strike in the Gaza Strip - the world's most densely populated region - in two weeks.
The first missile landed about 70 metres from the vehicle in the Shaikh Radwan area of Gaza City.
The second missile slammed directly into the car. Palestinian civilians close to the area were wounded by flying shrapnel and glass.
"I saw a flame hit a small car and people trying to escape from the car," said Rauf Musalam, a business owner who witnessed the attack, "Apaches (helicopters) were overhead as people rushed to help the wounded."
A wounded man is carried to
hospital in Gaza City
Hamas has not confirmed the occupants of the car were members of the movement. The Israeli occupation army had no immediate comment on the attack.
Last Thursday, an Israeli helicopter missile attack in Gaza City killed the commander of the armed wing of Islamic Jihad, a top deputy and three civilians.
Minutes after the attack, a resistance fighter killed four Israelis at a bus stop outside Tel Aviv.
Israel has killed dozens of resistance fighters and some politicians in what it calls "targeted killings" in Palestinian areas.
The targeted killing of civilians is against the Fourth Geneva Convention. International law seeks to safeguard the lives of protected persons and to uphold violations of human rights laws.
The Palestinian Society for the Protection of Human Rights and the Environment (lAW) has carried out research into the targeted killing of Palestinian civilians.
The organisation found that in 2002, Israel had been responsible for killing 166 Palestinians through targeted political killings and injured 63 Palestinian civilians as a result.
Since al-Aqsa Intifada (uprising) against the illegal Israeli occupation began in 2002, an estimated 3680 people have been killed, including 2754 Palestinians and 860 Israelis.
In the past week, Israeli occupation forces have invaded Nablus, including the nearby Balata refugee camp, Jenin, Khan Yunus and Rafah.
Israeli troops killed two children
in the Balata refugee camp
The invasion of the Balata refugee camp which lasted for over seven days left two children dead and scores of civilians injured.
Occupation forces demolished homes, made more than 30 arrests and placed a curfew on the refugee camp, the largest in the West Bank and home to an estimated 20,000 refugees who left or were thrown out of their homes in 1948 when the state of Israel was created.
Occupation soldiers are still in the West Bank town of Nablus, searching homes in the area known as the Old City and making arrests. It is believed the soldiers are looking for resistance fighters.
The ongoing invasions of Palestinian towns and cities comes as Palestinian prime minister Ahmad Quraya is in Saudi Arabia, holding talks with the royal family.
Quraya has urged Saudi officials to mobilise the kingdom's global influence to revive the Middle East peace process, Palestinian foreign minister Nabil Shath said on Tuesday.
Quraya met Saudi King Fahd bin Abd al-Aziz, Crown Prince Abd-Allah, Foreign Minister Saud al-Faisal and Interior Minister Prince Nayif bin Abd al-Aziz.
The talks covered "the recent developments on the Palestinian front and the Israeli aggression against the Palestinian people," said a Palestinian spokesperson.