Moshe Haimowitch, a representative of Israel's Health Ministry, confirmed the test results late on Wednesday after meeting with Palestinian experts.
The confirmation came after Palestinian officials suspected bird flu to be behind the deathsay of 30 chickens at a farm close to the Israeli border.
The virus has also been detected in neighbouring Egypt where it has been blamed for the death of a woman.
A Palestinian agriculture official had earlier said that H5N1 had spread to the Gaza Strip, without giving details.
Israel is battling an outbreak of the virus that has infected poultry farms in southern Israel, near the Gaza border.
In a rare show of co-operation, Israel conducted the tests for bird flu on behalf of the Palestinian Authority.
A spokeswoman for the Israeli agriculture ministry said it was "highly likely" the birds in Gaza had died of the H5N1 virus.
She said initial tests had only confirmed the presence of the H5 part of the strain and that it was not yet known whether the birds had been infected with H5N1 or a less deadly virus.
She was not able to say when final results would be obtained.
The Palestinian Authority on Tuesday declared a state of emergency to prevent the spread of the virus.
The H5N1 virus has rippled out from Asia to the Middle East, Europe and Africa in recent months, with migratory birds suspected to be the main culprits in spreading bird flu.
Bird flu can infect people who come into close contact with infected poultry and has killed around 100 people since late 2003.
Egypt reported a fourth suspected case of bird flu in humans on Tuesday.
Israeli officials have said there have been no cases of humans contracting the virus in Israel.