The Hamas-run civil defence agency said Israeli troops fired on crowds near the aid site in Khan Younis. More than 200 people were reportedly injured.
The Israeli military has told the BBC it is looking into the reports.
It is the latest, and potentially the deadliest, of the almost daily shootings that have been taking place recently near aid distribution sites in Gaza.
Almost all the casualties in Gaza in recent days have been linked to the delivery of aid rather than Israeli strikes on Hamas targets.
Witnesses say that Israeli forces opened fire and shelled an area near a junction to the east of Khan Younis, where thousands of Palestinians had been gathering in the hope of getting flour from a World Food Programme (WFP) site, which also includes a community kitchen nearby.
A local journalist and eyewitnesses said Israeli drones fired two missiles, followed shortly after by a shell from an Israeli tank positioned between 400 and 500m away from the crowd. The explosions caused many casualties.
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