An Israeli tank opened fire towards a Lebanese army position in southern Lebanon on Tuseday, according to local media reports.
Lebanese troops responded with artillery fire, the reports said.
There were also reports that a Katyusha rocket fired from Lebanon struck the northern Galilee.
Residents of the area reported hearing several loud explosions.
Aharon Valensi, head of the Upper Galilee Regional Council, told television news that residents of the area had been told to take cover in bomb shelters.
"We're ready," he said. "The IDF prepared us for situations like this and we just hope that it is only a localized incident."
Southern Lebanon has traditionally been a stronghold for Hezbollah but regular Lebanese troops returned to the area in 2006 following Israel's month-long summer war with the Shi'a militant group.
A United Nations peacekeeping force, UNIFIL, is also deployed in the area.
Tuesday's clash follows rocket attacks on Monday on the southern city of Eilat and neighboring Aqaba in Jordan, in which a Jordanian citizen was killed and five others were injured.