Ashraf al-Qudra, spokesman for the Hamas-led Gazan health ministry, confirmed six men had been killed.
One of the men came from Hamas' armed wing, the Ezzedine al-Qassam Brigades confirmed, while at least some of the others were believed to be from Islamic Jihad, an allied militant group.
Their deaths were announced after Israel "neutralised a terror tunnel leading into southern Israel," military spokesman Jonathan Conricus told journalists.
Tunnels dug by Gaza's Islamist rulers Hamas were a key issue in the last war with Israel in 2014, but discoveries of those stretching into the Jewish state have since been rare.
Islamic Jihad said in a statement that the tunnels were "part of the policy of deterrence to defend the Palestinian people".
It added they were studying potential responses to this "dangerous escalation".
Conricus said the Israeli military was not seeking a further escalation.
He said the tunnel was targeted around two kilometres (less than two miles) from the Israeli village of Kissufim, but added that no Israelis had been in danger.
In April 2016, Israel's military said it had located and destroyed a tunnel extending from the Gaza Strip into Israel in the first such discovery since the 2014 conflict.
Hamas forces have used tunnels in the past to enter Israel and carry out attacks.
"We are developing breakthrough technology to deal with the tunnel threat," Israeli Prime Minister Benjamin Netanyahu said in a statement.
"We are implementing it. Today we located a tunnel and destroyed it. Whoever seeks to harm us will be hit."
Today's operation came as Palestinian rival factions Hamas and Fatah seek to follow through on a reconciliation deal signed earlier this month aimed at ending a decade-long rift between them.
Hamas is due to hand control of the Gaza Strip back to the Palestinian Authority by December 1 under the agreement.
The Islamist movement seized the enclave in a near civil war with Fatah, based in the occupied West Bank, in 2007.
Israel has warned that it will not accept a unity government that includes Hamas if the Islamist movement does not disarm and recognise the country, among other demands.
During the war, 32 tunnels were discovered, including 14 that extended into Israel, according to a UN report on the conflict.
It was the third war in Gaza since 2008 and the longest, deadliest and most destructive.
It killed 2,251 Palestinians, while more than 10,000 were wounded and 100,000 were left homeless.
On the Israeli side, 74 people were killed, all but six of them soldiers.
Israeli leaders have been keen to show they are addressing the threat of tunnels from the Gaza Strip.
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