A military spokesperson told Xinhua that the drone was located by the Israel Air Force along the coast line of the southern city of Ashdod.
It set off a Code Red alert in the area. According to the spokesman, the drone was apparently carrying explosives.
The US made Patriot missile battery intercepted the drone and destroyed it in mid-flight, the army spokesperson said, adding that Israeli navy force was looking for the drone wreckage in the sea.
Rocket assault from Gaza continued throughout the night, with some 12 rockets hitting southern Israel.
Some seven additional rockets were intercepted by Iron Dome, Israel's anti-missile system. The latest incident occurred as Israel's deadly offensive on Gaza entered its seventh day and the toll in Gaza escalated to 172.
However, Israel is under increasing pressure to halt the strikes.
Calling for immediate ceasefire, UN Secretary-General Ban Ki-moon Sunday urged Israel to scrap plans for a wider ground campaign.