About 100 policemen stormed the Rafah compound and took up positions alongside border patrol officers at the customs section of the crossing, Palestinian security officials and witnesses said.
Hours after the European observers, responsible for monitoring the crossing and ensuring the terms of an Israeli-Palestinian agreement are upheld, fled, Julio De La Guardia, spokesman for the monitors, said the situation had been brought under control and the border would be reopened later Friday.
It was not immediately clear how the incident was resolved.
A rash of kidnappings and armed takeovers of government institutions has plunged the Gaza Strip into chaos in recent months, underscoring Palestinian leader Mahmoud Abbas' inability to control the area after Israel's withdrawal in September. Abbas left Gaza on Thursday for a tour of the Persian Gulf.
Meanwhile, Palestinian security forces were going house-to-house in the Gaza town of Khan Younis on Friday to search for a British aid worker and her parents, who were abducted Wednesday by gunmen near the Rafah crossing.
At a news conference in Gaza, Palestinian Police Chief Alaa Housni threatened to use force to gain their release.
"Those who have them have not yet made any demands and have not yet announced who they are. These are enemies to the Palestinian people. We will get them. If we have to use force we will," Housni said.
In similar incidents in the past, gunmen demanding jobs have released hostages unharmed.
Also Friday, the Islamic Jihad militant group claimed responsibility for a suicide bombing in the West Bank that killed one soldier and two other Palestinians. Members of the group announced on loudspeakers in the West Bank village of Atil that their bomber, Sohieb Ibrahim Yassin, 19, had carried out.
The bomber detonated explosives strapped to his body after getting out of a taxi that had been stopped at a roadblock just south of the town of Tulkarem. An eyewitness said soldiers stopped a car and asked the young man to get out. He did and then he blew himself up, reports CBS News correspondent Robert Berger. A 21-year-old army officer was killed, along with the bomber's accomplice and taxi driver.
Islamic Jihad has carried out all six suicide bombings since Israel and the Palestinians declared a cease-fire last February. It's a blow to a fragile 10-month-old cease-fire that is due to expire on Saturday, reports Berger. Israel has been targeting Islamic Jihad leaders in arrest raids in the West Bank and airstrikes in Gaza.
The policemen who stormed the border crossing were friends and family of an officer killed Thursday in a family feud in Gaza, Palestinian security officials said. They said no Palestinian officials would be allowed to leave Gaza until the gunman responsible was executed, according to officials.
The policemen shut the border's main gate and fired in the air when a car carrying an unidentified Palestinian official tried to enter the compound. The chief Palestinian security officer at the crossing asked the policemen to leave, but they refused.
The border had been closed because according to the Israeli-Palestinian agreement the crossing cannot operate if the European contingent is not present, said De La Guardia.
Palestinians are frustrated over the increasing lawlessness in Gaza and the West Bank, which could force Abbas to confront militias behind much of the violence, especially as he heads toward a January parliamentary election. The Hamas militant group poses a serious challenge to Abbas' ruling Fatah movement in the vote.