The Department of Foreign Affairs and Trade in Canberra has confirmed that Australian man Brian Ambrosio was kidnapped.
News reports identified the principal as Dutchman Hendrik Taatgen.
The pair was reportedly forced from their car as they arrived at the American International School in Beit Lahiya in the northern Gaza Strip, and then bundled into another vehicle.
Witnesses said the pair's blue Honda Civic was stopped by an armed gang, and the car was later found locked and parked on the side a road.
The interior ministry said it has been informed about the abductions and has launched an immediate investigation.
The school is mostly staffed by foreign nationals and the US government provides partial funding.
Students of the school, many of them foreigners, have been sent home.
The abduction took place on the last day of term before the Christmas break.
DFAT said an Australian consular official has travelled to the Gaza Strip and is now working with Palestinian security officers in charge of the investigation.
Militants behind abductions
The abductions are the latest in a string of kidnappings in the Gaza Strip, where gunmen operating in the name of resistance against Israel frequently operate beyond the law.
Militant gangs have used abductees as bargaining chips to get relatives released from Palestinian prisons, to secure jobs or to settle personal scores.
More than 10 foreign journalists and aid workers have been kidnapped this year, however all have been released unharmed.
Palestinian leader Mahmoud Abbas has said that tackling lawlessness is one of his top priorities.
However he has not managed to control armed factions, who often operate beyond the law.
Mr Abbas in August issued specific orders to the security services to ensure the safety and protection of all foreigners in the Palestinian territories.
"Any aggression against our foreign guests represents a challenge to the rule of law and we will not permit it," he said in an edict.
But three days later a French television soundman was abducted in Gaza City, and released unharmed on August 22.
The United Nations withdrew all its non-essential foreign staff earlier in the summer after a number of its employees were abducted, although all were subsequently released unharmed.