The attack on a mini-van parked in the Jebaliya camp also wounded nine other children, Al Jazeera's correspondent in Gaza reported.
A Palestinian security official said the van was empty at the time and that the dead and wounded were bystanders.
Muhammad Matar, a resident, said a group of Palestinian resistance fighters had gathered on a street corner near a kindergarten and that the strike was aimed at them.
None of the fighters was wounded, Matar said.
The Israeli army said an air strike in the same area "... was an attack on a Qassam [rocket] launching cell in the area of Beit Lahiya. They came to pick up their launchers that were used yesterday to fire at Israel, two Qassams. We identified hitting them".
A Palestinian woman blew herself up when Israeli soldiers stormed her house in Gaza, witnesses said.
"A woman came close to our forces and she was carrying an explosive device, she blew herself up, killing herself and lightly wounding one soldier, in the northern town of Beit Hanoun," the Israeli spokesperson said.
Israeli forces have been carrying out an offensive in the town of Beit Hanoun in northern Gaza since last week.
Thirty-four rockets have struck Israel since Wednesday.
Two members of Al-Aqsa Martyrs' Brigades were later wounded in a second air strike north of Gaza City, witnesses said.
The Israeli military said it had hit fighters armed with anti-tank missiles who were approaching the security fence on the Gaza border.
Fifty-two Palestinians have been killed and more than 200 injured in the offensive.