The strike in Deir al-Balah in the central Gaza Strip came as Israeli and Hamas negotiators hold talks with mediators in Qatar over a proposed 60-day ceasefire and hostage release deal aimed at building agreement on a lasting truce.
However, a senior Israeli official said on Wednesday that an agreement was not likely to be secured for another one or two weeks.
Khalil al-Deqran, spokesperson for the health ministry in Gaza's Hamas-run government, said Israel had targeted a medical centre and that six of the dead were children.
Many of those injured had suffered severe wounds to the head and chest, he said.
Israel's military said it had struck a militant who took part in the Hamas-led October 7, 2023, attack that triggered the war.
It said it was aware of reports regarding a number of injured individuals and the incident was under review.
Videos on Thursday verified by Reuters showed a scene of carnage, with the bodies of dead and injured, mainly women and children, lying in blood amid a cloud of dust as people screamed all around, and of motionless children lying in blood on a donkey cart.
Israeli attacks on Palestinian hospitals and health facilities, detentions of medics, and restrictions on the entry of medical supplies have drawn condemnation from the United Nations.
The United Nations humanitarian agency OCHA said in May that the UN had documented at least 686 attacks affecting health care in Gaza since the war began.
Dwindling fuel supplies risk further disruption in the remaining, semi-functioning hospitals, including to incubators at the neonatal unit of al-Shifa hospital in Gaza City, doctors there said.
"We are forced to place four, five or sometimes three premature babies in one incubator," said Dr Mohammed Abu Selmia, the hospital director, adding that premature babies were now in a critical condition.
US President Donald Trump met Israeli Prime Minister Benjamin Netanyahu this week to discuss Gaza amid reports Israel and the Palestinian militant group Hamas were nearing agreement on a US-brokered ceasefire proposal after 21 months of war.
The Israeli official who was in Washington with Netanyahu said that if the two sides agreed to the ceasefire proposal, Israel would use that time to offer a permanent truce requiring Hamas to disarm.
If Hamas refused, "we'll proceed" with military operations in Gaza, the official said on condition of anonymity.
A Palestinian official said the talks in Qatar were in crisis and that issues under dispute, including whether Israel would continue to occupy parts of Gaza after a ceasefire, had yet to be resolved.
The two sides previously agreed to a ceasefire in January but it did not lead to a deal on a permanent truce and Israel resumed its military assault in March, stopping all aid supplies into Gaza and telling civilians to leave the north of the tiny territory.
Israel's military campaign in Gaza has killed more than 57,000 people, according to Palestinian health authorities.
It has destroyed swathes of the territory and driven most Gazans from their homes.
The Hamas attack on Israeli border communities that triggered the war killed about 1200 people and the militant group seized about 250 hostages according to Israeli tallies.
