The Islamic Hamas movement said Israel was behind the blast at a base belonging to its military wing, the Izza-dein al-Qassam Brigades.
But Palestinian security officials said the explosion was most likely caused by a "work accident" at the base.
An Israeli military spokesman in Tel Aviv said the Israeli military had "no knowledge" of any incident in south Gaza City.
Güncelleme Tarihi: 20 Mart 2008, 12:55
Earlier Thursday, Israeli soldiers shot dead a Palestinian farmer in the southern Gaza Strip, medical officials and witnesses said.
They said the soldiers opened fire on Hassan Abu A'bed, 65 as he approached his farm.