Two hours after the blast, Israeli soldiers who had come to inspect the scene opened fire on stone-throwing Palestinian youths, wounding nine Palestinians including a 12-year-old boy, medics and witnesses said.
Palestinian security sources identified two of the victims as members of Hamas's military wing, Izz al-Din al-Qassam Brigades - Saad Ghazal, 23, and Saad Zamil Aliyan, 22.
The third Hamas activist who later died in hospital of injuries sustained in the massive blast, was identified as 26-year-old Said Qutb.
Witnesses said Israeli F-16 fighter jets were overflying the area just before the powerful explosion, causing supersonic booms.
An Israeli military source said the army was not involved in the incident, and suggested it could have been a "work accident", implying that those killed might have accidentally set off a bomb they were transporting.
However, Izz al-Din al-Qassam Brigades claimed the men were killed by an Israeli helicopter strike.
"It is a new assassination operation and the whole world knows it. The attacks continue," it said in a statement received by AFP which also identified Ghazal and Aliyan as "local leaders" and vowed revenge.
Palestinian security sources did not immediately give an explanation for the explosion.