Hundreds of Palestinians have poured through holes in Gaza's border fence with Egypt, created by militants on commandeered bulldozers.
Militants commandeered diggers and assailed the wall
Egyptian police fired into the air but could not stop between 300 and 1,000 people surging through the breach.
Members of the militant al-Aqsa Martyrs' Brigade earlier opened fire and blocked the Rafah border crossing.
They were demanding the release of a leader, Alaa al-Hams, arrested on Tuesday by Palestinian police.
He is suspected of abducting UK aid worker Kate Burton and her parents and holding them captive for three days.
Ms Burton, 24, her father Hugh, 73, and mother Helen, 55 - known as Win - of Newbury, Berkshire, were abducted when their car was intercepted in Gaza on 28 December.
They were freed on 30 December.
On Wednesday, gunmen drove up to the Rafah crossing point and set up a checkpoint at the access road.
They turned away anyone wishing to cross into Egypt, except medical patients and those who had to catch planes from the airport in Cairo.
After Palestinian security forces told them where Mr Hams was being held they dismantled their roadblock.
The gunmen then headed for the frontier and began ramming a hole in the high concrete wall that marks the border with Egypt.
Egyptian troops and military vehicles converged on the area from their side of the frontier, with some Egyptian soldiers firing warning shots.
Hundreds of Palestinians swarmed into no-man's land between Gaza and Egypt as the militants fired into the air.
"Many people walked through. The Palestinian police can't stop them," Fawzi Shahin told the Associated Press news agency.
Earlier, around 40 gunmen occupied a number of local government buildings in Rafah, including the office of the Palestinian Central Election Commission.
Egyptian forces could not prevent Palestinians surging in
"We have not yet received answers on our demands to immediately release Alaa al-Hams," a gunman calling himself Abu Yazan said at the time.
The commission's office "will remain closed and we will not allow parliamentary elections to be held in Rafah unless Alaa is released."
There has been no indication the demand has been met.
The Palestinian Authority took control of the Rafah crossing in November after a deal brokered by the US.
Israel held the border station for nearly 40 years but ceded control to Palestinian forces after it withdrew from the Gaza Strip.
On Friday the crossing was closed for a number of hours after a protest by Palestinian police officers.
The police, backed by gunmen from the Fatah party, stormed the crossing and forced European Union monitors to leave.
The BBC's Alan Johnston in Gaza says all this comes against the background of real concern over the security situation ahead of parliamentary elections due to be held in three weeks' time.