She said the men, carrying Kalashnikov assault rifles, were intercepted near southern Israeli villages.
The two militants had infiltrated Israel "apparently with the intention of carrying out terror attacks," the Haaretz newspaper website said.
Residents were told to stay indoors and local roads were closed as the troops and the infiltrators traded fire, army radio reported.
Moawiya Hassanein, the head of Gaza emergency services, said there was coordination with Israel to have the bodies of the two militants returned to the Palestinian enclave.
Later on Friday, in what the military said was an unrelated incident, an Israeli army tracker moving near the border fence was hit by gunfire from the Gaza side and was flown by helicopter to hospital.
His injuries were described as "moderate," meaning that his life was not believed to be in danger.
The border between Israel and the Gaza Strip is heavily fortified, and militant incursions into the Jewish state are rare.
In April 2008, Palestinian fighters, under cover of mortar fire, breached the border near the Nahal Oz terminal and moved into Israel.
The militants shot dead two Israelis in what the army called a "failed abduction attempt," before they themselves were killed by tank fire as they fled back to Gaza.
Friday's incident followed overnight Israeli air raids which did not result in any casualties.
Israeli officials said the three strikes, targeting a residential area in the north of the Palestinian enclave and two in the south, were in response to an earlier missile attack by militants.
Israel launched a devastating assault on Gaza in December 2008 aimed at halting rocket fire. Some 1,400 Palestinians and 13 Israelis were killed in the 22-day Operation Cast Lead.
The military says more than 330 rockets have been fired from the Gaza Strip into Israel since the end of the offensive. Israel generally responds to rocket attacks with air raids.
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