Israel and Palestinian militants in Gaza have fought three wars since 2008 and the strip has been under an Israeli blockade for 10 years.
Fishing off the northern part of the strip, adjacent to Israel, is limited to six nautical miles offshore and the Israeli navy regularly fires at Palestinians at the zone's outer limit.
Such incidents rarely result in deaths.
Fishermen's union head Nizar Ayash said that the shooting and the arrest of four other crewmen happened in one incident and two more arrests were made when the military boarded another Gaza boat overnight.
An Israeli military spokeswoman confirmed the shooting but did not speak of additional arrests.
"A vessel deviated from the designated fishing zone in the northern Gaza Strip," the spokeswoman told AFP. "Naval forces in the area called upon the vessel to halt and fired warning shots into the air."
She said that the boat ignored the warning and the navy then fired at it.
"As a result of the fire a Palestinian was injured and was evacuated to an Israeli hospital for immediate medical treatment," she added.
The military later confirmed that the man had died. Gazan fishing official Zacharia Bakr also confirmed he had died.
The size of the fishing zone has varied over the years, having been set at 20 nautical miles by the Oslo accords of the 1990s before being reduced by Israeli authorities.
About 4,000 fishermen work off the coastal strip, more than half of whom live below the poverty line.
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