The raid, backed by at least two Apache helicopters and a dozen armoured vehicles, including tanks took place in the early hours of Tuesday.
Several homes were also damaged in the raid which killed Bilal Hamdan, 23, and Jamil Abu Mustapha, 25.
Hospital sources told Aljazeera that three of the injured are in a critical condition as they were wounded by shrapnel when a helicopter gunship fired a missile near the al-Khalidiya school in the area.
The Israeli occupation army claims the raid was aimed at preventing Palestinian resistance fighters from firing mortar bombs at surrounding Jewish settlements, reports Aljazeera's correspondent.
Eyewitnesses told Aljazeera that resistance fighters have fired anti-artillery shells which damaged an Israeli bulldozer.
The correspondent added that the Israeli forces continue to enforce a closure on the Gaza Strip for the third consecutive day.
Meanwhile, at least 18 Palestinian activists were detained by Israeli forces in the West Bank overnight.
On Monday, Israeli occupation forces raided several parts of the West Bank and detained at least 31 Palestinian activists.
According to Aljazeera's correspondent in Ram Allah, those arrested were members of different resistance movements.
Using tanks and bulldozers, the Israeli army also raided a refugee camp in the southern Gaza Strip city of Rafah and demolished at least three homes.
The correspondent also reported that Israeli forces demolished 14 Palestinian homes in the Qarara area of the Gaza Strip.