The patient, a Thai national who was admitted on Friday after complaining of flu symptoms, worked at infected coops at a collective farm in southern Israel hit by H5N1, a hospital spokesman said.
Two other patients were en route to the same hospital, although it was unclear if they worked at the farms. Israel has had no confirmed human cases of the virus.
Moshe Haimovitch, a senior agriculture ministry official, said: "Last night we informed the World Health Organisation that the H5N1 virus has spread to Israel."
Officials said they were double-checking the results and expected final confirmation soon.
Agriculture officials ordered the culling of turkeys and chickens near the two communal farms, Kibbutz Ein Hashlosha and Kibbutz Holit, near the Gaza Strip.
More than 10,000 poultry had died in recent days at the farms.
Agriculture officials said hundreds of thousands of fowl might need be killed to contain the outbreak.
The communal farms were put under quarantine and fowl within 3km of the infected areas would be culled, officials said. The virus was also suspected to have infected fowl at a communal farm 25km southwest of Jerusalem.
The Palestinian Authority had been informed and asked to inspect chicken coops in Gaza and the West Bank, officials said.
Israel is also testing dead fowl found in the West Bank and Gaza on behalf of the Palestinian Authority in rare co-operation as agriculture officials attempt to control the spread of the virus.
The H5N1 strain of bird flu has spread with alarming speed in recent weeks across Europe, Africa and parts of Asia.
The more it spreads, the greater the fears of the virus mutating into a form that could easily pass from one person to another, triggering a pandemic in which millions could die.
Bird flu is hard to catch but people can contract it after coming into contact with infected birds. Around 100 people have died from bird flu around the world.
Hospitals in Israel have been put on alert for patients arriving with flu-like symptoms.