Israeli troops and tanks backed by attack helicopters launched attacks on militant strongholds in and around Gaza City overnight, killing at least seven Palestinians.
Another three Palestinians were crushed to death as Israeli engineers blew up two metal workshops in Gaza's northern Tufah neighbourhood, according to witnesses and hospital officials. A suicide bomber who tried to blow up a tank was also reported killed.
An Israeli army spokeswoman said the Gaza incursion was a "pre-emptive, pinpoint, targeted operation against a Hamas stronghold".
But Hamas' spiritual leader, Sheik Ahmed Yassin, said: "The Israeli enemy has lost its mind. They are like an angry bull. We have to make (Israel) pay the price sooner or later, and our people are capable of resisting."
The raids came despite tentative ceasefire talks by the two sides, apparently in a campaign launched by Israel to retaliate for a Hamas landmine which destroyed an Israeli tank and killed four Israeli soldiers.
In Shajaiyeh, a district east of Gaza City identified with the militant Islamic Jihad, fighters in black balaclavas and camouflage fatigues fired rifles and homemade rockets at the Israeli forces. Hamas said one of its men blew himself up alongside an armoured column, which witnesses corroborated.
Three Palestinian General Intelligence officers were killed and five policemen wounded when an Israeli helicopter gunship fired missiles at a nearby position held by Palestinian security forces, Palestinian sources said.
There were also fierce clashes when Israeli armour rolled into Tufah, whose residents are sympathetic to militants linked to Palestinian leader Yasser Arafat's Fatah faction and which is located only a kilometre (0.5 mile) from Gaza's central square.
Four Palestinians, including two gunmen and a policeman, were shot dead and another 20 wounded, according to officials.
Israeli engineers blew up two metal workshops, a tactic the Israelis have employed in the past against foundries and factories they claimed were making munitions to support the Palestinian uprising in the West Bank and Gaza Strip.
The explosions caused a nearby building to collapse, crushing three men - two of them brothers - who were inside, Palestinian security and hospital officials said.
At least 1,850 Palestinians and 705 Israelis have been killed since a Palestinian uprising began in September 2000 after negotiations for a Palestinian state in the West Bank and Gaza Strip deadlocked.