A thunderous explosion was heard along with the sounds of helicopters on Saturday.
Ambulances raced to the scene where missiles had struck a small grey car travelling on a road linking Gaza City with the Jabaliya refugee camp.
Security sources said the helicopter, backed by an F-16, fired three missiles at the car.
The attack took place at about 19:45 (17:45 GMT) in the Saftawi neighbourhood. It completley destroyed the car, killing Amin al-Dahduh, 42, a member of the Islamic Jihad movement.
Al-Dahduh was travelling with his cousin, Ayman, 20, who was not said to belong to the Palestinian group.
Child in serious condition
The third victim was Mahmud Judah, a field commander for Islamic Jihad's armed wing.
"We strongly condemn this Israeli crime targeting a Palestinian neighbourhood by Apache shelling. We condemn this assassination crime and ask the quartet to send an observer to the Palestinian territories"
Chief Palestinian negotiator
Of the 15 wounded, one was a child, who is said to be in serious condition.
Hundreds of people gathered at the hospital to check on the condition and identities of the casualties.
Israel has frequently sent helicopter gun-ships and warplanes to kill Palestinians in missile strikes and confirmed that Saturday's attack was carried out by the Israeli Air Force.
The last such strike was on 7 February, when a helicopter fired a missile at a car, killing an Islamic Jihad leader in the vehicle and a 12-year-old boy on his way to school.
The latest deaths brought the number of people killed since the Palestinian uprising broke out in September 2000, to 3789, including 2835 Palestinians and 886 Israelis.
Islamic Jihad warned the missile attack would only strengthen the group's struggle against Israeli occupation.
"Assassinating Mahmud Judah, the military leader of Jihad's al-Quds Brigades in Gaza, is a clear message from Israel that it will continue its aggressive attacks against the Palestinians, particularly assassinating resistance leaders," Khalid al-Batsh, Islamic Jihad leader, told Aljazeera.
"Sharon knows that there is no power, whether Arab or international, that will stop the Israeli aggression against the Palestinians," al-Batsh said. "Therefore, the Palestinian resistance will be the only power standing in Sharon's face," he added.
Al-Batsh then vowed the Palestinian resistance would continue.
"The Israeli assassinations of resistance leaders and fighters will never halt our resistance," he said.
Crowds gather round the
Al-Batsh went on to say the US is to blame as well.
"Israel and the Bush Administration are held responsible for the assassination of Judah," al-Batsh said. "Bush has not done anything to halt the Israeli crimes and that is why we hold the United States responsible for yesterday's crime too."
Palestinian negotiations minister Saib Uraiqat also lashed out at the strike.
"We strongly condemn this Israeli crime targeting a Palestinian neighbourhood by Apache shelling. We condemn this assassination crime and ask the quartet to send an observer to the Palestinian territories", he said.
The "quartet" of sponsors behind the Middle East "road map" for peace are the European Union, Russia, the United Nations and the United States.