The Monday attack struck al-Zaitun neighbourhood of Gaza just after midnight local time - the same district in which six Israeli soldiers were killed in an ambush a week ago.
It was not immediately clear whether there were any casualties.
Israeli soldiers have also shot at three Palestinians, claiming the men had attempted to cross the border into Israel from the Gaza Strip.
Israeli soldiers opened fire at the men when they were deemed too close to a zone near the border.
The military could not confirm whether the three people shot were killed.
Israel radio earlier reported four Palestinians had been killed as they tried to cross the border into Israel from the Gaza Strip.
Both incidents come just hours after US Secretary of State Colin Powell called for an end to the cycle of violence.
He said the US opposed Israel's continued demolition of Palestinian homes in a Gaza refugee camp.
"We believe that the wholesale bulldozing of houses ... is something that we must express our opposition to"
US Secretary of State
Speaking at a news conference in Jordan, Powell added: "We don't think that that is productive. We believe that the wholesale bulldozing of houses ... is something that we must express our opposition to."
The UN Relief and Works Agency (UNRWA) spokesman in Gaza, Paul McCane, also voiced his opposition to the continued destruction of homes that has so far forced more than a 1000 people into tents.
McCane warned that a real human catastrophe was about to take place and insisted what occupation forces were doing in Rafah was disproportionate to any possible military threat they might face.
But Israeli Chief of Staff Mushe Yaaloon said hundreds of Palestinian houses were listed for demolition along the Egyptian border, while the Israeli Higher Court of Justice said the army had a legal right to raze homes for reasons of self-defence.