The ruling Palestinian Hamas movement said the dead men were both members of its Ezzedine al-Qassam Brigades armed wing and named them as Abdelkader Habib and Bassel Abed.
An Israeli army spokeswoman told AFP that a "vehicle transporting terrorists was attacked" in Gaza but provided no further details.
The deaths brought to 5,574 the number of people killed since the 2000 start of the intifada, the great majority of them Palestinians, according to an AFP count.
On Sunday, an Israeli air raid on Gaza killed a man in his 70s and wounded nine other people.
A Hamas militant was also seriously wounded in a separate raid in the Zeitoun neighbourhood of the city.
Israel has stepped up its air raids on Gaza since last on Wednesday when rocket fire from the territory killed a woman in southern Israel.
Several government ministers have called for greater use of so-called "targeted killings" against Hamas leaders in retaliation for rocket fire.
In the West Bank, Israeli soldiers shot dead a Palestinian who approached a roadblock near the town of Jerichio carrying a toy gun, an army spokesman said.
Palestinian security sources identified the dead man as Rakan Abed Nusseirat, 16.

Copyright AFP (Agence France-Presse), 2006