Initial tests on dead chickens suggest the deadly H5N1 strain of bird flu has spread to the Gaza Strip, Israeli and Palestinian officials have said.
The tests were conducted after some 200 chickens died in the southern town of Rafah, on the border with Egypt.
Israel has been culling hundreds of thousands of birds after an H5N1 outbreak was confirmed on farms next to the Gaza Strip last week.
Egypt on Tuesday reported its fourth suspected case of bird flu in humans.
Earlier this month, Egyptian state TV said a woman had died from the H5N1 virus.
The world's human death toll has reached 103 since late 2003, the World Health Organization (WHO) said on Tuesday. The latest five deaths were confirmed by the WHO in Azerbaijan.
The virus cannot pass easily from one person to another but there are fears it could mutate, triggering a pandemic.
US scientists have confirmed the H5N1 virus has evolved into two genetically distinct strains, potentially increasing the risk to humans.
The tests were carried out after the chickens were found dead in a coop in Rafah, Israeli Agricultural Ministry's spokeswoman Dafna Yarisca said.
The tests had only confirmed the presence of the H5 part of the strain, but Ms Yarisca said "it was highly likely" that the birds had died from H5N1.
Israel conducts all tests on behalf of the Palestinian Authority (PA), which does not have the technology.
The PA declared a state of emergency on Tuesday in an attempt to curb the spread of the disease.
Palestinian and Israeli officials were expected to meet later on Wednesday to discuss further measures.
Israel has culled some 400,000 infected turkeys and chickens since the H5N1 was found in two farms in Ein Hashlosha and Holit last week.