In addition to the seven killed in the strike, others were badly injured.
The Kafr Qasem school houses hundreds of displaced people in a camp west of Gaza City. Casualties were transferred to Al Ahli Hospital in the city.
Among those killed was a senior manager in the Ministry of Public Works and Housing in Gaza, Majed Saleh.
The Israeli military has struck a number of school compounds sheltering the displaced in recent weeks. On Saturday, 22 people – most of them women and children – were reported killed in an Israeli strike on a school compound in Zeitoun, in central Gaza.
At least 30 people were wounded, including several who suffered severe burns.
This is the latest in a series of Israeli raids on school buildings housing displaced people in Gaza, where tens of thousands of Palestinians driven from their homes by Israeli offensives and evacuation orders have been sheltering.
According to the Gaza media office, Israel has bombed at least 180 displacement and shelter centres to date.
More than 41,400 Palestinians, most of them civilians, have been killed in Israel’s war on Gaza since last October, according to Gaza’s Ministry of Health.