Security services of the Hamas movement which controls the Gaza Strip confirmed that the five Palestinians, all in their twenties, died in an Israeli air raid and were to be buried on Sunday.
The five victims were killed as Israeli warplanes struck the Gaza Strip late on Saturday, Israel's military and Palestinian sources said.
Warplanes hit central Gaza to take out a squad of "armed men about to fire rockets at Israel", the Israeli military said.
The strike was one of the most deadly since Israel's 22-day war against Gaza's Hamas rulers, dubbed Operation Cast Lead, which began at the end of December 2008 and cost the lives of 1,400 Palestinians, most of them civilians, and 13 Israelis, 10 of them soldiers.
Witnesses said armed men preparing an attack on Israel were killed in the raid which they said targeted Deir el-Balah in central Gaza.
The Israeli army said in a statement that a warplane had "identified and hit a team of agents preparing to launch rockets at Israeli territory from the central Gaza Strip."