Dr Jumaa al-Saqqa, a spokesman for al-Shifa hospital, told Aljazeera that a number of Palestinians were also wounded in the strike on Salah al-Din street, the main road through the coastal strip.
Hospital officials and witnesses said two schoolchildren were among the dead.
According to Aljazeera's correspondent, the first strike hit a car carrying members of al-Quds Brigades, the military wing of Islamic Jihad.
Palestinian witnesses said several missiles were fired, and one of them hit the car.
The second missile came two minutes later, after a crowd had begun to gather around the scene of the attack, witnesses said.
The correspondent said two ambulance drivers were also killed.
Hospital sources said some of the wounded were in critical condition.
Islamic Jihad reaction
Khalid al-Batsh, an Islamic Jihad spokesman, confirmed that al-Quds Brigades fighters were killed in the attack.
"The Israeli aggression will continue as long as the international voice is silent and Arabs feel embarrassed to condemn the Israeli massacres"
Islamic Jihad spokesman
"The activists were killed defending our nation, religion and Palestine, and continuing our resistance and jihad in the face of the Israeli occupation.
"The Israeli aggression will continue as long as the international voice is silent and Arabs feel embarrassed to condemn the Israeli massacres."
The two activists were identified as Hammudeh al-Wadyeh, 25, and Shawqi al-Saiqali, also thought to be in his 20s.
The Israeli occupation army confirmed that it fired a missile at the car.
An army spokeswoman in Tel Aviv said: "There was an attack on a car that was heading to fire rockets at Israel."
Israel-Palestinian violence has escalated since an explosion on a Gaza beach on Friday killed eight Palestinian civilians.
On Sunday, an Israeli air strike killed two Hamas members in the northern Gaza Strip and wounded three others.
Israeli troops killed a Palestinian resistance fighter in the West Bank early on Wednesday during a raid, a Palestinian security source and medics said.
The source said Mohammed al-Wash, 26, was with al-Aqsa Martyrs Brigades, the armed wing of the Fatah movement of Mahmoud Abbas, the Palestinian president.
He was shot by an Israeli military unit in the West Bank city of Jenin, the source added.
An Israeli military source said an armed man was identified in the area and shot.
Meanwhile, the Palestinian Centre for Human Rights based in Gaza City, has expressed its concern at the escalation of Israeli attacks in the occupied territories.
The rights organisation recorded the killing of 14 Palestinians and the injuring of 36 in Israeli attacks in 24 hours, in a report issued on June 11.
A rights group says Israel has
increased attacks on Palestinians
Israeli jets resumed causing sonic booms in the skies over the Gaza Strip on June 10.
"These attacks cause widespread fear among civilians, especially children, and cause material damage to property," the group said.
It called "upon the international community to act immediately to stop these crimes, renewing the call to the High Contracting Parties of the Fourth Geneva Convention to fulfil their obligations to guarantee the protection of Palestinian civilians in the occupied Palestinian territories".