The Israeli navy on Monday fired at a flotilla of dozens of naval vessels that departed the port in Gaza City and were heading toward Israeli waters.
Thousands of Palestinians demonstrated on the coast near the city, and the military fired toward them and used riot control measures. According to the military, demonstrators burned tires and throw stones, with some of them throwing an explosive device toward troops.
The Gaza Health Ministry reported 49 Palestinians were wounded, including 10 who were hospitalized.
Israel has blockaded Gaza for over a decade, with Egypt's aid. The measures are necessary for national security reasons, Israel argues, as Gaza is ruled by the Islamist militant Hamas organization.
Activists have long tried to break the blockade by sea. In an attempt in 2010, Israeli soldiers stormed the Turkish boat Mavi Marmara, resulting in the deaths of 10 Turkish citizens and damaging ties.
Yaniv Kubovich and Almog Ben Zikri contributed to this report.