"We can confirm that two of our people were taken against their will in Gaza," Fox News said in a statement.
A Fox employee in Gaza, who declined to give his name because he was not authorized to release information about the incident, said the two kidnapped people were reporter Steve Centanni, a U.S. citizen, and cameraman Olaf Wiig who was from New Zealand.
The men, along with a bodyguard, were parked near the headquarters of the Palestinian security services when two trucks filled with masked gunmen pulled up and boxed them in, according to the employee. The gunmen took the two reporters out of their sports utility vehicle, which was marked "TV," and drove away, he said.
Major militant groups in Gaza denied having any connection to the incident and there was no immediate word of any demands made.
However, Wiig's wife Anita McNaught said Fox representatives had told her negotiations for their release were already under way.
"There will be people working through the Palestinian Authority, through the authorities in Gaza ... but Fox News are vastly experienced on the ground there, so they have all the contacts they need," said McNaught, who is a BBC World television presenter.
McNaught, who is currently in Syria told New Zealand's National Radio she intends to come to the area soon to help secure the release of the two men.
Also, New Zealand was sending a team to the area, said Rosie Patterson, the head of consular services at New Zealand's Foreign Ministry.
New Zealand has no representation in the immediate area, and currently is working through British diplomats, she said.
Security officials put police across Gaza on alert and set up roadblocks to find the gunmen and free the reporters, said Interior Ministry spokesman Khaled Abu Hilal.
"This is not acceptable at all," he said.
The Committee to Protect Journalists called for the men to be freed.
"We are gravely concerned about our colleagues' safety and call for their immediate and unconditional release," said CPJ Executive Director Joel Simon. "These are well established journalists who are not participants in the conflict. They should be treated accordingly and freed."
Several foreigners have been kidnapped in Gaza in recent months with their abductors demanding jobs from the Palestinian Authority or the release of people being held in Palestinian jails. All those kidnapped have been released within hours without harm.