Palestinian militants fired a barrage of rockets at Israel and the Israeli military responded with a wave of pre-dawn air strikes in Gaza killing one man and injuring 2.
The Israeli army said it targeted sites belonging to Hamas, the Islamist militant group which rules Gaza, after Palestinians fired 10 rockets into Israel late on Friday.
Eight of them were intercepted by missile defense systems. One projectile hit a house in a town near the border, causing damage but no casualties, report says.
In southern Gaza, report says a small cabin was hit, killing a 27-year-old civilian and wounding two others.
None of the armed groups in Gaza claimed responsibility for firing the rockets. The Israeli military said Hamas was ultimately responsible for the attack.
Israel and Hamas have fought three wars over the past decade and cross-border tensions are high and such flare-ups are not rare.
Israel pulled its troops and settlers from the narrow coastal strip in 2005 but keeps the enclave under a blockade, citing security concerns. About 2 million Palestinians live in Gaza.