The violence comes as U.S. Secretary of State Condoleezza Rice left the region after a three-day visit aimed at shoring up a fragile truce. Israel and the Palestinians declared and end to the more-than four years of fighting in February, but after months of relative calm there has been a flare in violence over the last two weeks.
Three of the wounded were in a serious condition and were being airlifted to hospital in the nearby Israeli city of Beersheeba. The fourth person was lightly wounded.
The army said troops in the area then clashed with the gunmen and were carrying out searches. Settlers said one of the Palestinian gunmen was shot dead by soldiers, but the military could not confirm this.
There was no immediate claim of responsibility for the shooting.
On Saturday the army said it had captured a would-be suicide bomber armed with an 11-pound explosive belt, who infiltrated Israel from the Gaza Strip.
The 18-year-old Palestinian, identified as Jihad Shahada, from the Jebaliya refugee camp in the northern Gaza Strip, told police interrogators he planned to blow himself up in the Tel Aviv area, the army said.
A second man was later arrested in the town of Jaffa, adjacent to Tel Aviv, the army said.
Following the capture, APTN footage showed the youth lying on the ground in the field, his hands and legs tied. He was then led away to an army jeep.
Shahada tried to detonate the explosive packed belt he was wearing, but the device failed, the Haaretz daily reported. The bomb was safely detonated by military sappers.
Earlier in the month an Islamic Jihad suicide bomber killed five Israelis in the seaside town of Netanya.
However, the military said that Shahada was a member of the Al Aqsa Martyrs' Brigades — a militant group loosely affiliated with Palestinian leader Mahmoud Abbas' ruling Fatah Party.
A spokesman for the militants in Gaza denied any connection to the incident. "This man is not a member of Al Aqsa and Al Aqsa is not involved in this fabricated Israeli story," said the spokesman, identifying himself only by his nom de guerre, Abu Ahmed. Militant leaders conceal their identities fearing retribution from the Israelis.
Almost all of the more than 100 suicide bombers have come from the West Bank and not Gaza, which is completely surrounded by a fence. This was the first successful infiltration from Gaza into Israel this year, the army said.
During her visit Rice met separately with Israeli and Palestinian leaders over three days — the third time that has happened since she took over at the State Department in January.
Rice came to the region in a hastily arranged trip to try and rescue the shaky Mideast truce amid an escalation of violence, determined that Israel's mid-August withdrawal from the Gaza Strip go ahead as planned.
However Rice won no new commitments during the fresh round of shuttle diplomacy.
"There are discussions, meetings, going on between the two sides and I think they're making some progress," Rice said after lengthy meetings Saturday with Palestinian leaders.