Most of Thursday's dead were reported to have killed in the town of Beit Hanoun in northern Gaza during an Israeli army raid on the area.
Witnesses said soldiers, backed by tanks and using loudspeakers, ordered all residents over 16 years of age in the town to present themselves at a school for questioning.
The town of 30,000 people has been effectively under an army curfew since the Israeli troops entered it on Wednesday, the witnesses said.
The latest casualties bring to 16 the number of Palestinians killed since Wednesday.
The Israeli army said the operation was aimed partly at halting rocket fire at Israel from northern Gaza.
However Palestinians continue to launched rockets from the area despite the Israeli offensive.
Four homemade missiles hit the nearby Israeli border town of Sderot, wounding one person on Thursday, medical officials said.
"Residents are in panic as the sound of gunfire and explosions never stops. The curfew is very, very tight"
Yamen Hamad, a local journalist
Thursday's offensive has further weakened the prospects of resuming peace talks between the two sides, already minimal since the Hamas movement took office in March after winning elections.
Hamas has said the bloodshed could also complicate Egyptian-brokered talks aimed at arranging a swap of Palestinian prisoners in Israel for an Israeli soldier abducted by militants in a cross-border raid last June.
"Residents are in panic as the sound of gunfire and explosions never stops. The curfew is very, very tight," Yamen Hamad, a local journalist, told Reuters by telephone.
One Israeli soldier was killed during the raid. More than half the Palestinians who died were said to be militants.
An Israeli army spokeswoman said all men in Beit Hanoun had been asked to gather in one place to answer questions.
Relatives said one of the civilians killed on Thursday, a 75-year-old man, was shot by troops on a rooftop when he went onto the balcony of his home to take his disabled son inside. The army said its forces were only targeting militants.
Among the dead was a Hamas gunman who worked as a bodyguard for Ismail Haniyeh, the Palestinian prime minister, witnesses said.
Hospital officials said 15 people had been wounded, including four children and a woman injured when a tank shell hit their house.
The assault is one of the biggest since Israel launched an offensive in Gaza to try to force the release of the captured soldier and halt the rocket fire.
More than 280 Palestinians have been killed in the four-month-old offensive, about half of them civilians. Three Israeli soldiers have been killed.