Palestinian health officials said that two of the victims were a pregnant woman and her 18-month old child.
At least three Palestinians were killed and 12 others were wounded on Wednesday after Israeli launched air strikes on Gaza.
Gaza health ministry said two of the fatalities were a pregnant Palestinian woman and her 18-month-old child, another victim was a Palestinian man.
Twelve others were also injured in the attacks, the ministry said.
Israel said the air strikes came in retaliation to Hamas firing at least 36 rockets across the border.
In a written statement, Izzeddin al Qassam Brigades, the military wing of Hamas, claimed responsibility for firing rockets.
“Hamas hit the "enemy" with a large number of rockets,” it said.
TRT World's Mohammad Mansour reports from Gaza.
The escalation comes after the Hamas leadership convened for a rare meeting in Gaza last Friday.
The gathering had raised hopes a deal for a lasting truce with Israel, with the backing of Egypt and the United Nations.
Israeli television broadcast images of a house and cars reportedly damaged by the rockets in Sderot.
Parts of the town have been closed off and police bomb disposal units were at the scene of the strikes, a spokesman for the force said.
The violence came after two fighters from the military wing of Hamas, which governs Gaza, were killed by Israeli fire on Tuesday.
Over the past four months, 158 Palestinians have been killed by Israeli fire, including at least 120 in the protests near the fence and others in Israeli air strikes and other incidents elsewhere in Gaza, according to the Gaza Health Ministry and a local rights group.
Twenty-four of the slain protesters were minors, the ministry has said. One Israeli soldier was killed by a Gaza sniper during this period.
Protesters demand the “right of return” to their homes and villages in historical Palestine, from which they were driven in 1948 to make way for the new state of Israel.
They also demand an end to Israel’s 11-year blockade of the Gaza Strip, which has gutted the coastal enclave’s economy and deprived its roughly two million inhabitants of many basic commodities.
The Gaza Strip, home to nearly two million Palestinians, has been reeling under a crippling Israeli blockade since 2007.