Adham Abu Salmia said the man was leading his goats in an open area near Gaza's Erez border crossing with Israel Thursday when he was shot. He died later in hospital. Another man with him was wounded.
The Israeli army said Gaza militants use the area to attack Israelis, so it allows no one to enter. It says soldiers fired warning shots at two men before shooting them in the lower body.
Violence has escalated in recent weeks on Gaza's borders. Israel says the ruling Hamas militant group recently fired a tank-piercing missile for the first time. The army says it is deploying technology that can shoot down incoming projectiles before they hit.