During the incident in Egypt's Sinai Peninsula, six drug smugglers were arrested south of Al-Awja border crossing - known in Israel as the Nitzana crossing - the security sources added.
An Israeli official also said the suspects were most likely trying to smuggle drugs across the border from Egypt, which has been at peace with Israel for decades.
The Israeli army's Arabic spokesperson, Avichay Adraee, said 20 "suspects", including gunmen, approached the border near Nitzana before being fired at by soldiers operating in the area.
Injuries were reported, he added on social media platform X.
Al-Awja-Nitzana is just over 40 km south of Rafah, the main crossing between Egypt and the Gaza Strip.
Since war broke out between Israel and Hamas on Oct. 7, Rafah has been the main entry and exit point for humanitarian supplies being sent into Gaza.
Much of the aid has been inspected by Israel at Nitzana.
Security incidents on Egypt's border with Israel are relatively rare, though there is a long history of smuggling activity from Sinai.
Egypt has boosted security on its side of the border in recent years and has cleared a buffer zone close to its border with Gaza.
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