Occupation forces reduced the two storey building to rubble on Tuesday. Other adjacent buildings were damaged in the explosion.
Israeli soldiers also uprooted tens of trees before withdrawing, said Palestinian security sources.
Two policemen were injured by Israeli gunfire.
Israel has threatened to step up its policy of assassinating Palestinian resistance leaders. The international community condemns such killings.
The invasion came hours before a meeting Israeli Prime Minister Ariel Sharon is to hold with his security cabinet to decide on a military attack against Palestinians.
The cabinet, chaired by Sharon, is expected to give the green light for recommendations by Defence Minister Shaul Mofaz for a series of unprecedented military attacks in the Gaza Strip.
It comes after two teenage Palestinian resistance fighters detonated bombs at the Israeli port of Ashdod, leaving 10 Israelis dead.