Palestinian medical sources named the man as 30-year-old Said Seyam, a Hamas commander of the Izz al-Din al-Qassam Brigades in Khan Yunus.
Hamas has a political leader by the same name.
Seyam was killed on Sunday by a sniper from a nearby Israeli observation tower. Witnesses said he was hit in the neck with a single shot.
His killing comes just two days after seven Hamas fighters were killed in Israeli air strikes over Gaza City and the northern West Bank. There was no immediate comment from the Israeli army.
Gaza raid imminent
Meanwhile, the army is preparing a broad Gaza Strip ground offensive and will decide in the coming hours when to launch it, Israel's deputy defence minister said on Sunday, as more homemade rockets and mortars hit Israeli targets.
Deputy Defence Minister Zeev Boim said Israeli officials would decide in the coming hours whether to put off the military offensive until after a snap visit this weekend by US Secretary of State Condoleezza Rice, who changed her schedule to try to stop the fighting.
Israeli soldiers and their tanks
are massing along Gaza border
"We are going for a broad operation in Gaza. No one trusts Abu Mazin any more. No one believes he is going to confront terrorism," Boim told Israel Radio, referring to Palestinian leader Mahmoud Abbas by his popular nickname.
Palestinian fighters have fired more than 100 projectiles at Israeli targets since Thursday.
The barrage has erupted less than a month before Israel is scheduled to withdraw from Gaza and four West Bank settlements.
Prime Minister Ariel Sharon vowed Palestinian fire would be squelched before the Gaza "disengagement".
Over the weekend, Israeli forces massed along the Gaza border, and troops continued to stream into the area early on Sunday, Boim said.
Asked if Israel would put off the strike until after Rice's visit, Boim replied: "It depends what will develop in the coming hours. It's a matter of hours. We will not suffer such a heavy rain of Qassam [rockets]."
The army plans to invade northern Gaza, the area fighters use to fire rockets at Sderot.
Chief Palestinian negotiator Saeb Erikat said an Israeli incursion into Gaza "will have a disastrous impact on the disengagement plan, and all efforts to make it a successful and smooth and peaceful disengagement".
He said Abbas was committed to reining in resistance fighters, and has "zero tolerance for multiple authorities and multiple guns".