The two Hamas fighters were killed during clashes with Israeli forces in Rafah, in the Gaza Strip, on Tuesday.
Security sources said Abdelkarim Shaath and Mohammad Muammar of Hamas' armed wing, the Ezzedine al-Qassam Brigades, were shot at close range after being detained by the soldiers.
The Israeli soldiers also wounded a wife of a Hamas's paramilitary force official and arrested two of his brothers.
Meanwhile, in northern West Bank, Israeli soldiers arrested a senior Fatah official in a dawn raid, officials said.
Jamal al-Tirawi, a spokesman for Fatah's parliamentary faction and a local leader of the Fatah-linked armed group al-Aqsa Martyrs Brigades, was detained in the Balata refugee camp outside Nablus, Palestinian security sources and the Israeli army said.
It is the first arrest of a Fatah MP since a legislative election in January 2006 in which the long-dominant party was trounced by Hamas movement.
Four other members of the armed group were also detained, they said. Wanted by Israel An army spokesman said troops "arrested four senior wanted Tanzim operatives", referring to the armed group.
He said the detainees "were involved in shooting and bombing attacks against Israelis where Israelis were killed and injured" and that four handguns were found at the site where the men were arrested.
Later on Tuesday, three Islamic Jihad fighters were killed in an explosion in the central Gaza Strip.
A Palestinian security source said it appeared the three men were killed in a so-called "work accident," when explosives they were handling detonated accidentally.
An Israeli army spokeswoman said she was unaware of any Israeli attack in the area.
Islamic Jihad has been behind many of the recent rocket attacks fired from Gaza into southern Israel.
Israel has been waging a crackdown on Hamas, which it considers a terror group, for nearly two weeks, resuming deadly air strikes in Gaza in response to an increase in rocket fire, and arresting two Hamas ministers and 32 other senior officials in the West Bank.
The raids have so far killed 48 Palestinians, but failed to halt the rocket fire, with nearly 250 projectiles have been launched at Israel since May 15.
According to the army, the rockets have killed two civilians and wounded 20 others, while sending hundreds fleeing the southern town of Sderot that has borne the brunt of the fire.