The rocket hit a car and set it on fire. Rescue workers said three people were wounded — one seriously, one moderately and one lightly. The badly hurt woman was taken to a hospital in an intensive care ambulance, and later died.
At least 13 rockets were fired at Israel by Palestinian militants in Gaza on Monday, according to the military and Israeli media.
The attack came just after a meeting in Sderot between Israeli Foreign Minister Tzipi Livni and the foreign policy chief of the European Union, Javier Solana. They were not harmed.
The rocket attacks followed an Israeli air strike Sunday night that hit a Hamas lawmaker's house and killed eight people. It was the deadliest attack of a renewed Israeli campaign against incessant rocket fire.
In other developments:
The Israeli Air Force Sunday night hit the house of lawmaker Khalil al-Haya, who was not at home and was unharmed.
At least 13 people were wounded. All the dead and wounded were relatives and neighbors, his wife said. Hamas said two of the dead were militants.
An Israeli aircraft also attacked a car in the northern Gaza Strip on Monday, killing five Palestinian militants, Palestinian security and medical officials said.
Islamic Jihad, a militant group that has fired numerous rockets into Israel, said four of its members were killed in the attack.
The army confirmed the air strike in the Jebaliya refugee camp, and that Islamic Jihad was the target.
Israeli Prime Minister Ehud Olmert said the air strikes would continue until the rocket fire stops, reports Berger. Israeli cabinet minister Gideon Ezra said Hamas political leaders have been ordering attacks, so they're legitimate targets.
Army spokeswoman Capt. Noa Meir said Sunday's air strike was not aimed at al-Haya, but at a group of five armed Hamas men, including a senior militant, near the home.
"They, and only they, were the target, and they were hit," Meir said. Any civilian casualties, she said, "were the result of the terrorists' use of civilians as human shields."
Israel resumed its air strikes in Gaza last week in response to increased Palestinian rocket fire at southern Israeli towns. The air strikes have killed 36 Palestinians, most of them Hamas militants.
Early Monday, Israeli aircraft struck four more times in Gaza, the army said, killing a Hamas militant. The military said two of the targets were weapons factories. Palestinians said one was a cement factory and the other was a house.
The Israeli operations have not managed to stem the Palestinian rocket fire, and the rockets have severely disrupted life in Sderot, the militants' main target.
The Israeli air strikes appeared to have helped cement a truce between the warring Palestinian factions Hamas and Fatah that began to take hold after a week of intense violence.
"No one would condone fighting one another while the Israelis are shelling Gaza," said Hamas spokesman Fawzi Barhoum.
At the time of Sunday night's air strike, Al-Haya was attending an Egyptian-sponsored truce meeting meant to bring Hamas and Fatah together.
Barhoum said the attack was a sign that Israel is targeting "everyone — civilians and leaders."
"This escalation is very serious," he said, adding that "all options are open" for responding.
U.S. Ambassador Richard Jones gave a boost of support to the Israeli campaign, but urged Israel to do its best to avoid harming civilians.
"We constantly urge Israel to target its response as closely as possible at those who are responsible for the actions, and to avoid innocent collateral damage," Jones said at an academic conference Monday. "I don't think that we urge restraint, but we do urge people to be very clear that they're focused on those who are actually responsible for acts of terror against Israel."
The Israeli government decided Sunday to step up military action aimed at Hamas and Islamic Jihad, the two main Islamic militant groups in Gaza.
"The operations will focus on Hamas and the Islamic Jihad, who are responsible for the current escalation," the government said in a statement. It stopped short of approving a large-scale ground invasion or endorsing attacks on Hamas' political leadership.
In an interview with Army Radio on Monday, Public Security Minister Avi Dichter called for the assassination of Hamas leader Khaled Mashaal, who lives in exile in the Syrian capital of Damascus.
"Khaled Mashaal isn't immune, not in Damascus and not anywhere else. I'm convinced that at the first opportunity, we will bid him farewell," Dichter said. A Dichter aide told The Associated Press that he was expressing his personal opinion, not government policy.
Israel's attacks have been restricted to the Gaza Strip so far. But in a sign of a possible crackdown in the West Bank, Israeli troops raided two radio stations and one TV channel identified with Hamas early Monday in the city of Nablus, along with two independent TV stations. The troops confiscated equipment and videotapes, workers at the stations said, and all five went off the air.
The army had no immediate comment.