The fishermen complain that they get fired on before they even get close to the limit.
The navy spokesman said the boats had failed to respond to warning shots.
Palestinians said 20 people were onboard the boats at the time.
The burning boat was brought ashore where residents helped to put out the blaze.
|At least one fisherman was wounded
in the incident [AFP]
About 3,500 fishermen struggle to trade off Gaza's 40km Mediterranean coastline despite the blockade.
Israel imposed a crippling siege on the Gaza Strip in 2007 after the Hamas movement took full control of the territory after pushing out Fatah security forces loyal to Mahmoud Abbas, the Palestinian president.
International calls for the siege to be eased have mounted since Israel fought a 22-day offensive in the territory in December and January, increasing the hardships faced by residents.
Israel said that the war was aimed at ending rocket attacks by Palestinian fighters.