Palestinians had been crossing back and forth through holes blown in the border wall by militants to replenish depleting supplies of food and other essential goods caused by Israel's blockade of the enclave. Tel Aviv took the step in response to repeated rocket attacks from the territory.
Arab media reported that Egyptian riot police used water cannons after Palestinian demonstrators threw bricks at them.
Egyptian authorities moved to seal off the crossing in response to U.S. and Israeli demands to ensure order on their border with Gaza. Palestinians are now only being allowed back into Gaza.
Egyptian authorities said tens of thousands of Gaza residents remain in the country and their return could take several days. Loudspeaker announcements have been urging the Palestinians to go home, warning them that the border is to close soon. Palestinians have mainly flocked to Egypt's Rafah and the coastal town of el-Arish.
The United Nations said earlier that Israel was imposing "collective punishment" on Gaza.
Egyptian President Hosni Mubarak said earlier that he had given his personal permission for Palestinians to enter his country to buy food, saying that Gaza residents should not be left to starve due to Israel's blockade.
Israel and Egypt initially restricted movements of people and goods in and out of Gaza after Hamas won the 2006 Palestinian general elections, further tightening the blockade after the radical Islamic group seized Gaza in June, leaving the more moderate President Mahmoud Abbas in control of the West Bank.
Earlier reports said Egyptians have not allowed residents of Gaza into the capital and other large cities. The bridge across the Suez Canal leading to Cairo has been closed.
Israel, meanwhile, stepped up security at the border with Egypt on Thursday fearing militants could infiltrate the country.
"The Army has taken measures to ensure the security of Israeli citizens and the country's borders," the army press service said, adding that the highway along the Israeli-Egyptian border had been temporarily closed to traffic.
A Palestinian suicide bomber killed three Israelis in the Red Sea resort city of Eilat last year after crossing from Gaza to Israel via Egypt.
At least four Palestinian militants were killed during two separate Israeli air attacks on Rafah, south Gaza, on Friday.
