The condition of the men was not immediately known.
The Israeli occupation army said the men had approached a separation fence near a settler communal farming village in southern Israel east of Gaza City.
They said there have been several recent attempts to infiltrate Israel and plant explosives.
Palestinian security officials said they had no information.
A big explosion also shook Gaza City on Tuesday in what appeared to be a test detonation of a bomb, Palestinian security sources said.
They said the blast, in an open area of the coastal city, was not the result of an Israeli air strike which residents had become accustomed to.
Israeli forces, backed by helicopter gunships and fighter jets, have frequently fired missiles into refugee camps in incursions that have left a trail of death and destruction.
The Israeli army says that these operations are aimed at Palestinian fighters and have assassinated prominent Palestinian leaders including Shaikh Ahmad Yasin and Abd al-Aziz al-Rantisi among others.
Earlier, Israeli army sources stated that a mortar had also been fired into a Jewish settlement damaging a house.
Israel has assassinated several
No injuries were reported.
In the West Bank city of Nablus Israeli troops demolished the home of an alleged Palestinian fighter.
The army claims Wajdi Judi, 27, dispatched a bomber on 25 December 2003.
It identified Judi, who was arrested on 3 August, as a leader of the Democratic Front for the Liberation of Palestine, one of the PLO factions.
Residents said the army destroyed two floors of the three-storey home, leaving 11 people homeless.
Israel has consistently demolished the homes and farmland of Palestinians either during further land grabs, military incursions, or as the army says, to act as a deterrent.
Rights groups have constantly condemned such practices, describing them as collective punishment and gross human-rights violations.