Police said the rocket hit "between two buildings on a road" in Sderot, which is less than four kilometres from Gaza, causing no casualties.
Army spokesman Peter Lerner said Israeli forces yesterday retaliated by hitting targets of the Palestinian Islamist movement in northern Gaza.
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Palestinian health and security sources said two people were lightly wounded by the Israeli fire.
"One of them is a 20-year-old (young man) who was hit by shrapnel in the face," said Ashraf al-Qudra, spokesman for the Palestinian health ministry in Hamas-controlled Gaza.
Later yesterday, two more Palestinians were wounded by further Israeli strikes in the area, Qudra added.
Security sources in the territory said several targets in northen Gaza were struck by Israeli fire, and that a reservoir in Beit Hanun was destroyed.
Witnesses said a base of Hamas's military wing the Ezzedine Al-Qassam Brigades, in nearby Beit Lahya, was also hit.
There was no immediate claim of responsibility for the attack on Sderot.
Israeli media said it was the first time downtown Sderot had been hit by a rocket from Gaza since the last war with Palestinian militants in the territory in 2014.
On July 2, Israeli air raids hit four sites in Gaza after a rocket struck a building in Sderot. There were no casualties in either incident.
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