Witnesses said the violence happened when Israeli soldiers supported by military choppers boarded a Turkish ship that was leading the six-ship flotilla.
More than 100 Israeli commandos were involved in the raid that has sparked fury from the Islamic World, international circles and Palestinian leaders.
Arab language al-Arabia channel reported that Israeli forces have seized all aid cargoes and transferred all activists to Beer Saba' prison.
Reports from Hamas's Al Aqsa television said up to 20 passengers had been killed, of whom nine were Turkish nationals.
Media reports also said that senior Islamist leader Raed Salah had been severely injured in the raid.
Turkey's foreign ministry warned that the raid on the flotilla, which included Turkish vessels, may lead to "irreparable consequences" in bilateral ties.
"We strongly condemn these inhumane practices of Israel," a written statement said.
"This deplorable incident, which took place in open seas and constitutes a fragrant breach of the international law, may lead to irreparable consequences in our bilateral relations," it said.
The Islamist Hamas movement which controls the Gaza Strip Monday urged Arabs and Muslims to "rise up" in front of Israeli embassies across the globe in protest against Israel's deadly raid.
The aid flotilla was on the last leg of an aid mission to deliver some 10,000 tons of supplies to Gaza which has been under a crippling Israeli blockade since 2007.
The ships, carrying more than 750 passengers from 40 countries, had started heading towards Gaza from international waters of Cyprus on Sunday, with organizers saying they hoped to enter Gaza waters during the daylight hours.