The missiles hit the car as it was nearing the entrance of the Gaza town of Rafah, not far from the Egyptian border, said Palestinian security sources on Thursday.
The two victims were Amr Abu Sitta and Muhammad Abu Rizqa, both members of the Abu Risha Brigades, a splinter group of Palestinian President Yasir Arafat's Fatah movement, according to Aljazeera.net's correspondent.
Israeli occupation forces have been closing in on the Rafah area in recent days, shutting the Gaza-Egypt border crossing, leaving Palestinians stranded.
Earlier on Thursday, troops stormed the Rafah refugee camp, residents said. Bulldozers destroyed at least 18 buildings, which Israeli forces claimed were used by activists as shelter when firing on Israeli forces. However, Israeli troops regularly raze civilian homes.
Elsewhere in Gaza, two Palestinians were killed when they tried to plant explosives near a Jewish settlement.
Also, thousands took to the streets in Gaza to protest what they described as the failure of the Palestinian Authority to pressure Israel to lift a siege imposed on the town of Bait Hanun.
Some 2,500 Palestinian civilians
are stuck on the Egyptian side
Demonstrators and human rights activists blocked roads leading to Israeli areas, reported our correspondent.
A strict closure was slapped on Bait Hanun last month, preventing civilians from entering or leaving the area.
West Bank invasion
Israeli occupation troops shot dead at least one Palestinian during house raids in the occupied West Bank.
Israeli forces, backed by armoured vehicles and helicopters, invaded the northern village of Illar in the early hours of Thursday, reported Aljazeera's correspondent Muain Shadid.
The victim was Zahir Ashqar, a leader of al-Quds Brigades in the city of Tulkarim, north of the village. Illar was sealed off from the rest of the West Bank.
In a statement, the al-Quds Brigades said it would retaliate Ashqar's killing.
Clashes erupted between resistance fighters and occupation forces for about an hour and a half.
Troops carried out house-to-house searches in the village. They also destroyed a building they claimed was being used by resistance fighters as shelter, the correspondent said.