An Israeli army spokesperson, said: "The operation was aimed at arresting a wanted senior al-Aqsa militant who recently was working on different attack plans in the Jericho area.
"During the operation gunmen opened fire and our soldiers returned fire and wounded another wanted man. He managed to escape and went to a hospital.
"Our forces arrived at the hospital and took him. He was taken to a hospital in Israel and later he will be taken for questioning."
"Hamas is trying to draw us [Israel] into their civil war"
Zafon, Beersheva, Israel
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Hamas meanwhile has kept up rocket fire into Israel on Monday in defiance of a ceasefire call by Mahmoud Abbas, the Palestinian president, and Israeli threats to escalate military strikes in the Gaza Strip.
Seven rockets struck the town of Sderot in southern Israel but caused no casualties, the military said.
Israel has struck back with an aerial bombing campaign that has killed more than 40 Palestinians in Gaza, most of them fighters.
Avi Dichter, Israeli internal security minister, said during a visit to Sderot: "I think the measures are effective but not enough, and we have a large battery of some more steps that I hope we will be able to take."
Ehud Olmert, Israeli prime minister, said on Sunday that Hamas would be fought "without limitation".
Israel has stepped up its aerial offensive
Abbas, who agreed a now-defunct Gaza truce with Olmert in November, has been trying to coax Hamas's armed wing and other groups into holding their fire.
The Fatah leader was rebuffed on Sunday by Hamas, which said Israel must agree to a comprehensive truce in Gaza and the occupied West Bank.
Israel says it will continue West Bank raids against Hamas suspects.