The insurgents had allegedly been preparing to launch rockets at Israeli territory and were carrying guns and knives, Israeli radio reported. One of the cars was attacked near the partially demolished border wall with Egypt.
One of the dead was reported to be a senior militant of the Izzeddin al-Qassam Brigade, Hamas's armed wing.
Israel has been conducting air attacks on Gaza as well as ground raids into the enclave, controlled by the hard-line Islamic group Hamas since June, to curb rocket attacks into southern areas of the Jewish state.
Thousands of Palestinians made their way from the Hamas-controlled Gaza Strip into Egypt on Wednesday after militants partially destroyed a wall on the Gaza-Egypt border. Israel had earlier taken the decision to impose a blockade of food and fuel supplies into the Gaza Strip following almost daily rocket attacks on Israeli border regions by insurgents based in the enclave.
Egyptian riot police were reported to have retaken control of the crossing on Friday morning.
