Israeli fighter jets first fired a warning missile at the commander's house in Tuffah neighbourhood in Gaza city, then completely destroyed it with another heavy missile, Xinhua quoted witnesses as saying.
The house happened to be next door to a mosque, where dozens were offering their Ramadan prayers. The missile destroyed parts of the mosque, killing and wounding those present there.
Another Palestinian was killed in an Israeli airstrike on the southern Gaza Strip town of Rafah, according to a Health Ministry spokesperson in Gaza.
He added that the airstrike on the house in eastern Gaza city is the worst one since Israel's aerial offensive on the coastal enclave began Tuesday.
"Since Tuesday morning, 151 Palestinians have been killed and around 1,000 injured during the last five days of intensive Israeli airstrikes on houses. More than two third of the victims are civilians," the spokesperson said.
Earlier on Saturday, Hamas' armed wing al-Qassam Brigades claimed responsibility for attacking Tel Aviv with a barrage of rockets. Israel's Iron Dome anti-missile system intercepted three rockets above Tel Aviv's metropolitan area, while another rocket landed in an open area near southern Tal Aviv. No casualties were reported.