Palestinian sources said the two fighters - Hasan al-Banna and Ashraf Balush - were part of a joint military operation coordinated by both Islamic Jihad al-Quds Brigades and Fatah's al-Aqsa Martyrs Brigades.
The two fighters managed to infiltrate the checkpoint near the settlement of Kfar Darom east of the town of Dair al-Ballah in central Gaza on Wednesday evening.
Once inside the checkpoint, the fighters clashed with Israeli soldiers and Jewish settlers, the Palestinian sources said, adding that "as the two martyrs were clashing with the soldiers, other fighters fired three mortar shells to cover them".
Palestinian witnesses in Dair al-Ballah reported hearing gunfire and several explosions inside the settlement, and seeing ambulances going into the area.
They said two Israeli helicopters hovered over the area while three big explosions occurred inside the settlement,
apparently caused by homemade mortar shells.
Although both Palestinian fighters were killed, there were conflicting reports of Israeli casualties. One indicated that four Israeli soldiers had been wounded while another said an Israeli officer and three soldiers were wounded.
Several Israeli soldiers have been
killed and wounded in recent days
There has been no official comment from the Israeli military.
According to the Israeli daily Haaretz newspaper, one of the Palestinian fighters "opened fire on a convoy of three Israeli vehicles, moderately wounding an IDF officer - a captain who serves as a logistics officer in the Gaza Division - and a civilian. Three other soldiers were lightly injured".
Israel has divided the Gaza Strip into three isolated areas and deprived hundreds of thousands of Palestinians from access between Gaza Strip towns, cities, villages and refugee camp.
A third resistance fighter belonging to the al-Quds Brigades was killed several hours later as he attempted to infilitrate the Netzer Hazani settlement west of Khan Yunus, Aljazeera's correspondent in Gaza said.
There was no immediate claim of responsibility for the botched operation, but the al-Quds Brigades in Khan Yunus announced through loudspeakers the slain activist belonged to them, correspondent Wael Dahduh said.