The boat was carrying assault rifles, ammunition and other weapons, according to an Israeli military statement.
The military say the weapons were being transported from Jordan to the Palestinian territories.
The Israeli military described the boat that was reported to have been seized on Monday as a dinghy.
OK so we have two Palestinians and a bunch of assault rifles, ammunition and other weapons on a dinghy? Did they also get a fine for overloading a boat?
In March, Israel intercepted a ship it said was taking arms to the Gaza Strip.
It said that ship, which was seized in international waters, was carrying weapons meant for militant groups that were to be delivered via Egypt.