Emergency services chief Ashraf al-Qudra said that Musaad Alzaneen, a man in his early 20s, was killed in the raid on farmland near the town of Beit Hanoun yesterday.
He later added that Sharif Nasser, 31, had died of injuries sustained in the attack.
The Israeli military spokesman's office said the target was a Palestinian "rocket-launching squad".
"Israel Air Force aircraft targeted terrorists preparing to launch rockets in the northern Gaza Strip," it said in a statement.
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Israeli media had earlier reported a failed rocket attack, with the projectile apparently falling short and landing within the Gaza Strip.
On Friday an Israeli air strike destroyed a rocket launch site in Gaza which also represented "an imminent threat," the army said at the time.
No casualties were reported in the attack.
Tensions have risen in and around Gaza after a year of relative calm.
An increase in Israeli raids and Palestinian rocket attacks as well as border incidents in the past few weeks have raised the possibility of a major new confrontation between Israel and Hamas.
Hamas, the Islamist movement that ousted the Western-backed Palestinian Authority from Gaza in 2007, opposes a peace deal.