The IDF, including trackers, conducted widespread searches near Ghajar, on the border with Lebanon, on Thursday.
The searches, aided by police and border police, followed an alert that the electronic security fence in the area had been violated late on Wednesday night.
Troops were sent to investigate the possibility of a terrorist infiltration from Lebanon.
Police set up roadblocks east of Kiryat Shmona on Wednesday night as a precautionary measure, while the IDF conducted searches. No suspects were apprehended. Nevertheless, the searches continued on Thursday.
Senior military sources said the measures were taken to ensure the security of local residents and thousands of vacationers in the area as it was "better to be safe than sorry."
Ghajar, whose residents belong to the same Alawite tribe as Syrian President Bashar Assad, straddles the border between Lebanon and Israel.
The UN-delineated line to which the IDF withdrew in May 2000, in full compliance with Security Council Resolution 425, runs through the heart of the village leaving the northern part in Lebanon and the southern section in Israeli territory.
The Lebanese authorities refused to accept the concept of a security fence around the northern part of the village because it would be tantamount to annexation. Therefore IDF decided that the fence would run along the southern access to Ghajar effectively closing off the village from the rest of Israel.
All those entering or leaving Ghajar, whose northern section is wide open and is allegedly being used by hostile elements, especially Hizbullah, have to be searched. In the past, the Ghajar area has been used as a conduit for smuggling drugs into Israel. In recent years, some residents have been arrested and charged with supplying intelligence information to Hizbullah in return for being allowed to smuggle drugs.
As of late Thursday night, the security alert had not been lifted and searches continued. It was not clear whether the suspected infiltration was thought to be criminal or terrorist.
Senior police sources noted that there had been several incidents of Israeli drug dealers throwing packages of money across the security fence along the Lebanese border and receiving packages of drugs.
The military sources said the searches would continue until it was absolutely clear that there had not been an infiltration by hostile elements.