The operation, the second such raid this week, came as Israel launched its heaviest bombardment of southern Lebanon since its offensive began, carrying out 250 air raids and firing some 4,000 shells into the region.
The Israeli military said it killed three Hezbollah militants in the night-time raid and that eight of its soldiers were wounded.
"Guided by very precise intelligence, navy commandos entered an apartment on the second floor of a five-story building in the north of Tyre, where they killed at least three Hezbollah leaders," an Israeli naval commander said.
"There were point-blank exchanges of fire and grenades were thrown inside the apartment and two of our troops were seriously wounded," he said.
The commander said three of the fighters killed in the raid had fired a missile at the Israeli town of Hadera, 75 kilometres from the frontier, the deepest strike into the Jewish state of the present conflict.
"Our commandos were able to retreat and to hit with counterstrikes six to eight terrorists from neighboring buildings, killing some of them, and to return to Israel with aviation support," he said.
A Lebanese soldier was killed after his unit opened fire on the Israeli helicopters, police said.
Two civilians were also killed when Israeli air raids hit their scooter, on a road east of Tyre, police said.
A witness close to Hezbollah, who declined to be named, claimed an Israeli helicopter landed at Jall al-Bahr, an area of orchards at Tyre's northern entrance, and fell straight into a Hezbollah "ambush".
"A member of the commando group was killed and three others wounded," he said.
It was the first time in the conflict that Israeli troops had landed in the southern port city.
Police said the helicopters fired four missiles at Tyre's northern entrance, provoking a barrage of anti-aircraft fire.
A large number of helicopters had roared over Tyre before dawn, strafing all routes into the city.
The air and artillery bombardment of south Lebanon lasted for seven hours from dawn.
The worst-hit region was around the village of Aitaroun, which was hit by 2,000 shells.
Sixteen civilians were wounded in villages in the Tyre region after the air strikes, Lebanese police sources said.
Eight residents of Zawtar were also wounded in the intense bombardment aimed at villages by the Litani river, south east of Sidon.
Another five were wounded when their car was struck by Israeli missiles as they were fleeing Zawtar, police said.
Eight civilians were injured a Kfar Kila, a village in the central sector of the border, and two others in Kfarfila, east of Sidon by Israeli air raids, police added.
Police said 15 villages some five kilometres from the border were being systematically destroyed by the bombardments, which come after Israel vowed to create a security zone free of Hezbollah fighters.
According to the United Nations Interim Force in Lebanon (UNIFIL), exchanges of fire continued with high intensity in the past 24 hours in the south close to the border.
"Hezbollah fired rockets from various locations in large numbers. The IDF continued intensive shelling and aerial bombardment across the south," it said in a statement.
Firing came close to UNIFIL positions from the Israeli side and from Hezbollah.
"UNIFIL strongly protested all these incidents to the Israeli and Lebanese authorities respectively," he statement said.
Fourteen people were wounded, with more casualties only avoided because villagers had largely fled in the face of persistent Israeli fire.
Israeli troops have advanced from at least seven points on the border to establish a border buffer zone that General Udi Adam, chief of Israel's northern command, said is now up to 10 kilometres deep.
In fighting around the village of Taibeh, close to the border, one soldier was killed and another lightly wounded, an army spokesman in Tel Aviv
said.
Israeli warplanes also carried out pre-dawn attacks for third straight night against Beirut's southern suburbs, a Hezbollah bastion, killing three Sudanese workers.
The rocket strike on Hadera came after three days in which Hezbollah pummelled Israel with a daily barrage of more than 200 rockets, killing 12 civilians.
And there's been no letup.
Dozens of Hezbollah rockets slammed into communities across northern Israel on Saturday, police said.
The guerrillas fired 170 rockets into Israel, killing three civilians, according to Israeli sources.
Eleven rockets were fired on Kiryat Yam, near Haifa, causing extensive damage to roads, buildings and vehicles and injuring several civilians.
Rockets also hit Shlomi, damaging a roof, and houses were set on fire in Kiryat Shmona.
In the Arab village of al-Aramshe, one salvo killed three Israeli women in a direct hit on a house.
The women, members of the same family, were killed on the spot.
The northern town of Safed was hit by several rockets which caused damage to buildings and cars, but no injuries were reported.
More than 3,000 Hezbollah rockets have hit northern Israel in nearly four weeks of fighting, the Israeli army said on Saturday.
In all, 33 Israeli civilians have been killed by rockets since fighting began on July 12.