Israeli police say at least one rocket has hit the southern Israeli resort city of Eilat, near the Egyptian and Jordanian
Explosions were heard early on Thursday morning at the Red Sea tourist destination.
Ron Gertner, Eilat's district police chief, said the Grad rocket hit a construction site about 300 metres from a residential area shortly after midnight and did not cause any injuries or damage.
He told Israeli army radio that the rocket appeared to have been fired from Egypt.
The blast took place as thousands gather in the resort town for the Jewish holiday of Passover.
Yitzhak Halevy, mayor of Eilat, told army radio he had been holding talks with security officials about the deployment of a battery of Israel's "Iron Dome" anti-rocket defence system.
He also said there had been no indication that people were leaving the resort town in the wake of the incident, and police confirmed they had not issued any special instructions or alerts to residents or tourists.
Al Jazeera's Cal Perry reporting from Jerusalem said: "The Israeli military say they will conduct an investigation into where the rocket was fired from, but indicators show it is from the Sinai."
The last time a rocket hit Eilat and the nearby Jordanian town of Aqaba was in 2010, killing one person and injuring
In August 2011, a group of gunmen carried out a series of shooting ambushes just north of Eilat, killing eight Israelis.
Israeli troops subsequently shot dead six Egyptian police officers along the border, sparking a diplomatic crisis between the two countries, while striking Hamas security installations in Gaza, killing at least six Palestinians.