The Hamas-run health ministry says at least 45 people have been killed in what it said was an Israeli air strike at the Al-Maghazi refugee camp.
Israel's military says it is looking into whether it was operating in the area at the time.
The small camp has been experiencing overcrowding because of people fleeing bombardments further north.
Efforts are under way to find those still missing. It is thought more than 100 people were there at the time.
The head of Gaza's Al-Aqsa hospital said 52 people were killed in the blast on Saturday night, slightly more than the number given by the health ministry.
Residents have been trying to dig with their hands through layers of cement in an attempt to extract those trapped under the rubble.
Photojournalist Muhammad Al-Alul lost his wife and four of his five children. He had been reporting elsewhere when the blast happened.
"It did not occur to me that my children might be buried under the rubble," he told the BBC.
"I wish I had been with them and been killed with them."
The BBC has asked Israel's military to comment on the incident. While there has been no official response yet, an Israel Defense Forces (IDF) spokesman told the BBC he was unable to confirm whether the camp was hit by an Israeli air strike.
Speaking to BBC World Service's Newshour, Lt Col Peter Lerner added that any strikes taking place in southern Gaza were "specific intelligence-based strikes, specifically against terrorist elements".
Mr Lerner said that this did not mean that "there can't unfortunately be deaths".
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The Al-Maghazi camp is in the area where Israel advised people in the north of Gaza to evacuate to for safety as they continue their campaign to destroy Hamas in retaliation for its 7 October attacks on Israel.
However, air strikes in the south have not stopped.
"There is no safe place in Gaza," Muhammad, a civil defence officer who rushed to the scene of Saturday's strike to help, told the BBC.
"They ask the Palestinians to go to the south, but kill them everywhere - on the roads, in schools where people are sheltering, and even in hospitals."
The death toll in Gaza since 7 October is now more than 9,700, according to the Hamas-run health ministry.
More than 1,400 people were killed in the attacks by Hamas on Israel and more than 200 people were taken hostage.