A second Palestinian who had taken part in an attack on the settlement was wounded but managed to flee.
Claiming responsibility for the attack on Morag, the Islamic Jihad militant group said it also fired mortar bombs at the settlement.
Bloodshed in occupied Gaza and the West Bank has largely subsided since Palestinian President Mahmoud Abbas and Israeli Prime Minister Ariel Sharon declared a ceasefire in February.
But truce violations have multiplied in recent weeks, with Islamic Jihad carrying out several attacks.
The violence has raised fears that Israel’s planned withdrawal from Gaza could be disrupted.
Most Palestinian militant groups have honoured the de facto ceasefire but Islamic Jihad, with a small popular following and little stake in peacemaking, has carried out the only suicide bombing since the truce – an attack in Tel Aviv that killed five people in February.
Islamic Jihad says it has been provoked by continued Israeli raids to capture wanted militants.
Israel says militant violators of the truce are bent on forcing Mr Abbas to share power with them and crippling his bid to seek a Palestinian state through peace negotiations.
Mr Abbas and Mr Sharon pledged at a summit last month to work to preserve the truce and coordinate security steps to enable a smooth evacuation of Jewish settlers from Gaza.
The two leaders are expected to have another summit before the Gaza pullout, scheduled to begin in mid-August.
Meanwhile, Israeli settlers have unveiled plans for a mass march on Gaza on March 18 to protest the operation to remove all 8,000 settlers from the territory.
Organisers say convoys will gather in the southern desert town of Netivot, then make the 15-kilometre march towards the Gaza border.
The government imposed a temporary closure on Gaza settlements last week as security forces stormed an abandoned hotel taken over by Israeli extremist opponents of the pullout.
The authorities are widely expected to close off the territory on a permanent basis some time before the middle of August.