"All the casualties are Israeli, including four dead," an Israeli security source said on Wednesday of the explosion that went off shortly after 9:30am (0730 GMT).
"A woman suicide bomber infiltrated the transit terminal and blew herself up," Yoav Peled, a local Israeli security officer, told Army Radio.
Palestinian labourers go through Israeli security checks at the terminal before entering a nearby industrial complex.
Aljazeera received a copy of a joint announcement issued by Izz al-Din al-Qassam Brigades, the military wing of Hamas and Fatah's al-Aqsa Martyrs Brigades in which they claimed responsibility for the attack. The statement said the operation was carried out by Reem Salih al-Rayashi, a 21-year-old from Gaza city.
In a televised message which was provided to Aljazeera, al-Rayashi said she had longed for martyrdom since she was in her first year of univeristy. "I wanted to be the first Palestinian woman to carry out a martyrdom operation against the Israeli occupiers," said al-Rayashi in the televised message.
Reem Salih al-Rayashi, a mother
of two, said she loved her kids
"For the first time (Hamas) used a female fighter and not a male fighter and that was a new development in resistance
against the enemy," Hamas founder Shaikh Ahmad Yasin told Reuters.
"Resistance will escalate against this enemy (Israel) until they leave our land and homeland."
Witnesses said the bomber was limping as she approached a metal detector operated by Israeli security personnel.
When she set off the metal detector, she told soldiers that she had a broken leg and was wearing a metal splint.
"Soldiers asked her to step forward, and as she did so, there was an explosion," said a Palestinian woman who had been standing nearby. "I thought my ears were exploding."
'Glass and smoke'
"Glass and black smoke flew everywhere," a Palestinian witness told reporters. "Arabs were screaming, Jews were screaming, nobody knew what was going on."
It was the first attack since a bombing at a bus stop near Tel Aviv on 25 December.
An Israeli security source said some but not all the casualties were members of the security forces. Port authority employees, civilians who work in a nearby industrial zone, as well as settlers and foreign nationals also regularly use the crossing.
Thousands of Palestinians use the crossing in the northern Gaza Strip every day to work in Israel, although the border is frequently closed when Israel imposes a security clampdown on the Palestinian territories.