Israel said the troops landed in Tyre by sea on Saturday and destroyed a Hezbollah unit.
"Guided by very precise intelligence, navy commandos entered an apartment on the second floor of a five-storey building in the north of Tyre where they killed at least three Hezbollah leaders," a senior Israeli naval commander said.
"These three men were notably responsible for firing a missile against the city of Hadera," he said.
Friday's missile strike on Hadera caused no casualties but was the furthest south that Hezbollah rocket attacks have reached.
Before departing, the Israeli force also killed and wounded several other Hezbollah fighters who had launched a counter-attack on the raiders.
"Our commandos were able to retreat and to hit with counterstrikes six to eight terrorists from neighbouring buildings, killing some of them, and to return to Israel with aviation support," the Israeli naval officer said.
"We could have contented ourselves with liquidating these terrorists with a missile strike, but we launched this risky raid to spare innocent lives and to prove that we are capable of reaching terrorists wherever they are," he said.
Israeli forces were supported by air strikes from helicopters and fighter-bombers.
Hezbollah said its fighters repelled the attackers, killed an Israeli soldier and wounded others.
Lebanese soldier killed
A Lebanese soldier was among the five killed in the commando raid, a Lebanese army officer said.
One Israeli soldier was killed and another wounded in fighting around the Lebanese village of Taibe.
Also on Saturday, Israeli aircraft repeatedly bombed Beirut's southern suburbs. There were no reports of any casualties, local television and radio stations said. The Israeli army confirmed the raids, saying it had hit nine buildings used by Hezbollah.
In eastern Lebanon the road linking the town of Hermel with the Syrian city of Homs was attacked, residents said. The road was closed because of heavy damage. Further strikes hit areas in the eastern Bekaa Valley.
Israeli aircraft again dropped warning leaflets on the southern market town of Nabatiyeh during the night, urging civilians to move north "immediately, for your own safety".
On Saturday, the US and France completed a draft UN Security Council resolution calling for a "full cessation of hostilities" and a commitment to work "on a permanent ceasefire for a long-term solution".
The 15-member council will receive the text and review it at 3pm (1900 GMT) on Saturday, the UN said.
The draft asks the UN secretary-general to secure agreements in principle from Lebanon and Israeli on elements included in the resolution for a long-term solution.
It also asks the secretary-general to develop proposals on the delineation of Lebanon's borders with Israel and Syria that are disputed or uncertain, including the Shebaa Farms, and report to the Security Council.
A vote on the resolution is expected within the next few days.
Even if world powers agree on the resolution, Hezbollah leaders have sworn to fight as long as Israeli soldiers remain on Lebanese soil and the Israeli government has said it will continue to defend Israel from Hezbollah rockets.
The Lebanese government says at least 880 of its civilians and 27 police or government troops have been killed since the fighting began. Forty-four Israeli soldiers and 30 civilians have also died.