Three or four Hizb Allah fighters died in an exchange of fire with Israeli security forces after they stormed a border village.
Israeli military sources said an Israeli army position in the Shebaa Farms near the Israeli-Lebanon border came under heavy artillery attack from the Lebanese group on Monday.
Israeli rescue service ZAKA said the Hizb Allah attack killed one person and wounded three others. It was not immediately clear whether the reported casualties were military or civilian.
Witnesses said an Israeli border post in the Abbasiyeh area was set ablaze in the attack, in which Hizb Allah fighters used rockets, mortars and machine guns.
The attack on the army post was confirmed by Lebanese police.
Israeli warplanes attacked Hizb Allah targets on the Lebanese side of the border in response shortly after. Israel reportedly launched eight airstrikes.
Hizb Allah fighters launched an attack on the village of Ghajar where the majority of residents opted to take Israeli nationality after Israel captured the Golan Heights from Syria in 1967.
"Three or four" fighters died after storming the border village of Ghajar, exchanging fire with the Israeli garrison there, Israeli security sources said.
A wounded Israeli soldier is
taken into Rambam hospital
ZAKA put the number of dead fighters at four. Hizb Allah sources said three fighters died.
Israeli residents living near the area were asked to enter the bomb shelters, Israeli officials said, although there was no immediate confirmation from the army that any of the projectiles had landed in Israeli territory.
The attacks came two weeks after Israeli artillery batteries opened fire in the disputed area, frequently a source of tensions across the border since Israel's pullout in 2000.
Israel captured the small mountainous Shebaa Farms from Syria in the 1967 Middle East war, and it is now claimed by Lebanon with Damascus's approval.
Hizb Allah was largely responsible for driving Israeli troops from southern Lebanon in 2000 after a 22-year occupation.
The flare-up came on the eve of Lebanon's independence day, the first celebrated in three decades without the presence of foreign troops.