Hospital officials said the two men, members of Fatah's military wing, al-Aqsa Martyrs Brigades, were trying to detonate the explosive in a field near a barrier separating Gaza and Israel.
Three others were injured in the blast.
Earlier, a member of Hamas' Izziddine al-Qassam military wing was killed in a Khan Yunis refugee camp in southern Gaza.
A spokesman for al-Qassam Brigades told UPI the man was killed when a rocket-launcher he was carrying exploded.
The spokesman said Tahsin Khalaf wanted to fire a grenade at an Israeli bulldozer working on a Jewish settlement near Khan Yunis.