Two people died in clashes between armed groups in Ain al-Hilweh, a major Palestinian refugee camp near Lebanon's southern port city of Sidon, a Palestinian official told AFP.
Another six people were wounded in the clashes, including one man who was in critical condition.
The clashes reportedly erupted after Fatah official Talal al-Ourdoni was shot dead while walking through Ain al-Hilweh.
Al-Ourdoni headed a division of the Palestinian national security service inside Ain al-Hilweh refugee camp, the largest of Lebanon's refugee camps.
The Palestinian official spoke on condition of anonymity, he named the two killed in the Ain al-Hilweh camp as Talal Maqdah, a member of Palestinian President Mahmud Abbas's Fatah movement, and Diab Mohammad, a juice vendor.
"Armed men began shooting at two members of (Islamist group) Jund al-Sham, and there was an exchange of fire between Jund al-Sham and the Fatah organisation," the official said.
He also stated, the six wounded individuals had been specifically "targeted."
"The situation is very tense, and there are dozens of armed men spread out in the streets," he added.
Dozens of Palestinian families fled the clashes, including some who had sought refuge in camps after escaping violence in Syria.
Under a tacit deal, agreed after the 1975-1990 Lebanese civil war, the Lebanese army is not allowed to enter the camps, rather Palestinian factions are responsible for security.