"Four IDF soldiers were wounded, including two severely, one moderately and one lightly", the Israeli army said in a statement.
"The IDF views with great severity the attempt by Hamas to carry out seemingly spontaneous demonstrations meant to turn the fence into a confrontation zone and carry out acts of terror that would destabilize the Gaza Strip", read a statement by the IDF spokesperson's unit.
Israeli Prime Minister Benjamin Netanyahu responded to Saturday's events, describing them as "severe".
Militants escape from encounter site in Palhallan
As soon as the news of the operation spread in the village, scores of youths took to the streets and clashed with forces. Meanwhile, source said that the militants believed to be locals managed to break the forces cordon.
The tank targeted an observation post in southern Gaza in response to the "detonation of the explosive device adjacent to the security fence" where soldiers were on patrol.
Spokesman Jonathan Conricus said a "rogue group" had claimed responsibility for the blast. But he insisted that "from our point of view Hamas is responsible" and said the explosive had been planted during a protest arranged by the group on Friday. Israel and Egypt imposed a blockade in an attempt to weaken Hamas, and Israel and Hamas have fought three wars.
The Israeli army said that it also located two tunnels that extend from the border area into Israeli territory, near the explosion area. The border area has generally been quiet since the war, but has seen an increase in violence since President Donald Trump's announcement in December recognizing Jerusalem as Israel's capital.