Army radio reports a Palestinian suicide bomber attempted to detonate explosive devices strapped to his body, but security guards stopped him before they went off.
The attacker then threw hand grenades into the crowded wedding hall. He is included among the five dead, although the cause of his death was not immediately clear.
The Al Aqsa Brigades, a militia group linked to Palestinian Leader Yasser Arafat’s Fatah, has claimed responsibility for the attack.
The incident occurred in Hadera, a city in northern Israel located near the line that separates Israel and the West Bank. Several Palestinian bombings have been carried out in Hadera over the last few months.
Army radio reports police are attempting to defuse a belt filled with explosives that was found on the attacker.
The group said that Abed Hassouna, from a village near the Palestinian town of Nablus, carried out the attack to avenge the death of Raed Karmi, the Al Aqsa Brigades’ leader in the town of Tulkarem.
Karmi was killed in a bomb blast earlier this week that is thought to have been carried out by Israel. The group has vowed to avenge his death.
Before this week’s violence, there had been a lull of several weeks due to a truce led by Palestinian Chairman Arafat.
However, following Monday’s killing of popular militia leader Raed Karmi, the last of several Palestinian militant groups ended their cease-fire and said they would renew attacks on Israelis.
In the past week, seven Israelis have been killed and three Palestinians have died, including two gunmen who attacked an Israeli army post last Wednesday. Four Israeli soldiers were killed in that attack.