The casualty toll in Saturday's violence was one of the highest in a single incident in Gaza in recent months. At least five of the injured, some of them children, are in critical condition, medical sources said, Aljazeera reported.
Residents said a crowded mourning tent in the Shijaia neighborhood near Gaza City was full of people paying respects to a bereaved family man when a shell struck.
Ambulances, private vehicles and motorbikes rushed the wounded to hospital, eyewitnesses said. Among those killed was an 18-year-old man.
"The occupation's targeting of civilians was a grave escalation that must not pass in silence," Hamas spokesman Fawzi Barhoum said.
"Resistance must be reinforced in order to block the aggression."
The Israeli army opened fire with tank shells hitting an urban area East of Gaza City, according to Israeli sources.
The Gaza Strip, a coastal territory crowded with more than 1.5 million people, many of them refugees, has been under siege by Israel since 2007.
The Israeli military frequently carries out airstrikes and other attacks on the Gaza Strip, claiming the actions are being conducted for defensive purposes. However, disproportionate force is always used, in violation of international law, and civilians are often killed or injured.