A car explosion near a Gaza mosque killed a top Palestinian militant on Friday, triggering gun battles in which three others died after fighters accused Palestinian security chiefs of collaborating with Israel.
Palestinian Health Minister Basim Naeem said 36 people were wounded in the fighting, including seven children.
The violence followed a blast that killed Abu Youssef al-Quqa, a senior militant leader in the Popular Resistance Committees. Israel denied any involvement in the killing.
The surge of Gaza violence came a day after a Palestinian suicide bomber killed four Israelis in the West Bank.
Top Hamas officials defended the suicide bombing as "resistance" against Israeli "crimes", putting them at odds with Palestinian President Mahmoud Abbas, who condemned the bombing. Hamas trounced Abbas's Fatah faction in January's parliamentary elections and officially took control of the Palestinian government this week.
The Popular Resistance Committees is an umbrella group of militants in Gaza often responsible for rocket attacks against Israel. "We declare an open war against the Zionist enemy," said PRC spokesman Abu Abir.
Gunmen later left the streets, heeding calls from government ministers as tensions on Gaza's streets eased, Abu Abir said. Israel launched a wave of air strikes at targets in northern and central Gaza on Friday night, local witnesses and the army said.
No casualties were reported in at least three strikes including one in Gaza city. An army spokesman told Reuters earlier the military was set to intensify action, including preemptive strikes at launching areas militants use to fire rockets into the Jewish state.
Abu Abir later accused Palestinian security officials of collaborating with Israel. He singled out several by name, calling them "traitors" and vowing, "we will behead them".
Palestinian Prime Minister Ismail Haniyeh called an emergency meeting of ministers Which decided to investigate the killing.
A statement read by Information Minister Youssef Rizqa said the ministers had also ordered the removal of the armed men from the streets and called for calm but stopped short of blaming Israel for Quqa's killing.
"We want to bring to a stop the trading of accusations and the war of words between the parties, the government has told the armed factions to withdraw from the streets and restore calm," Rizqa said.
The blast that killed Quqa occurred near a Gaza City mosque at the start of Friday prayers. Abu Abir said Quqa and other PRC leaders had recently attended a meeting to draw up plans to attack Israeli targets. "He (Quqa) said he knew he was going to be assassinated soon," Abir said.
The PRC has refused to recognise a March 2005 truce with Israel, citing the Jewish state's non-compliance.