Two of those killed were Hamas fighters but the identities of the others were not immediately known. Weapons were found next to the decapitated bodies. The attack occurred just 200 yards from the office of Palestinian security chief Mohammed Dahlan.
Israel's army chief said only hours earlier that all members of the Islamic militant group Hamas are "potential targets for liquidation." The attack came three days after Hamas leader Ismail Abu Shanab was killed in a similar strike, in retaliation for a Hamas bombing that killed 21 people, including five Americans, on a Jerusalem bus.
The military strike came as Palestinian leaders were locked in a power struggle over command of their security forces.
The Israeli military had no immediate comment on Sunday's strike, during which helicopters fired at least three missiles.
Shadi Wassi said he was about to enter his house "when suddenly a huge explosion shook the ground under my feet. When I looked back, I saw a big flame burning the trees, then another two huge explosions hit the area."
Other witnesses said the men were sitting near the beach for about half an hour when the missiles hit.
Bystanders carried the bloodied body of one man to an ambulance, as the helicopters fired flares. Onlookers holding cigarette lighters searched the ground to gather pieces of flesh from the sand.
Hamas supporters who entered the hospital where the victims' bodies were taken identified two of them as Hamas fighters Ahmed Aishtawi and Wahid Hamaf. The other two had not yet been identified.
The current political crisis between Palestinian leader Yasser Arafat and his rival, U.S.-backed Prime Minister Mahmoud Abbas, was triggered by Arafat's refusal to relinquish control of security forces as demanded by the United States in a push to dismantle armed groups.
It appears unlikely Arafat will back down since his authority would be considerably weakened if he gives up command over security. He controls several key security branches, while Abbas controls the rest.
Abbas and his security chief, Dahlan, have said they need control over all men under arms to confront Hamas, the smaller Islamic Jihad militant group and renegades in their own Fatah movement. Arafat stalled when asked to support such a crackdown after last week's bombing, which killed six children.
With the wrangling continuing on the Palestinian side, Israel intensified its hunt for militants, killing Shanab on Thursday and sending troops and tanks into West Bank towns.
"Every member of Hamas is a potential target for liquidation," Israeli army chief Lt. Gen. Moshe Yaalon said Sunday in the first public comment by a senior defense official on Israel's new policy, adopted after Tuesday's bus bombing.
In the past three years of fighting, Israel has killed scores of wanted militants in targeted attacks — the Palestinians call them assassinations — but rarely has gone after Hamas political leaders. Abu Shanab was the most senior Hamas leader killed in a missile strike.
The United States made a rare appeal to Arafat last week to hand full control of Palestinian security forces to Abbas.
In a meeting of Fatah's Central Committee on Saturday, several members proposed appointing Gen. Nasser Yousef, a longtime Arafat loyalist, as overall commander of security forces.
The proposal was meant to make it easier for Arafat to give up control over the security services, participants said. It also was intended to sideline Dahlan, who is unpopular in Fatah's top circles and fell out with Arafat last year.
Arafat said he didn't mind appointing Yousef as Dahlan's boss, but balked at relinquishing control, participants said. The proposal was to be discussed again Sunday evening, but no resolution was expected.
As prime minister, Abbas also holds the role of interior minister, though Dahlan in effect has the job.
Abbas on Sunday stood by Dahlan, and said he will not resign as security chief.
Israel has accused Arafat of involvement in terrorism, and the United States has ignored the veteran Palestinian leader for months, seeking instead to work with Abbas, who was appointed in April under U.S. pressure.
Also Sunday, a rocket fired from the Gaza Strip landed about four miles from the Israeli city of Ashkelon, about 10 yards from an unmanned lifeguard post. It was the deepest a Palestinian rocket has struck in Israel in recent memory, the army said.
The rocket strike came just hours after Dahlan's forces began arresting weapons smugglers in the Gaza Strip on Saturday evening, seizing weapons and detaining at least 15 suspects. Security forces said they also sealed off six tunnels used to smuggle weapons from Egypt to the Gaza Strip.
Arafat also appeared to flex his muscles Sunday, when a loyal commander toured Gaza. Palestinian officials said Abdul Razak Majadah ordered local security chiefs to maintain stability, including along Gaza's northern border.
Israel has gathered armored vehicles close to the border, where rockets and mortars have regularly been fired into Israel and at Jewish settlements in Gaza.
In a meeting Sunday, Israeli security officials dismissed the Palestinian raids as fiction and affirmed that Israel will continue acting against militants, a security source said.
In the West Bank city of Nablus, the Israeli army said it uncovered a bomb lab Sunday, blowing up the site where they found a 176-pound bomb and bomb-making materials.
Two rockets similar to those fired from the Gaza Strip were found in the explosives factory, the army and witnesses said. It is unusual for the army to find rockets in the West Bank, which is in closer range to central Israeli cities than the Gaza Strip.