Rocket launches are rare in this part of Israel and police suspect that it came from Egypt's Sinai Peninsula AP reported.
Explosions were heard after midnight in Eilat, a popular tourist destination on the Red Sea that is getting set to welcome thousands of visitors for the Passover holiday.
Police spokesman Micky Rosenfeld said no one was injured in the attack and that police were searching for other rockets that may have landed in the city.
There was no immediate claim of responsibility. Rosenfeld said the rocket was likely fired from Egypt's Sinai Peninsula.
Israel has been warning of growing lawlessness in Sinai. Weak policing and difficult terrain may be turning the peninsula into the latest focus of Islamic militant activity in the region.
Rockets are regularly fired into Israel by Palestinian militants in the Gaza Strip, but launches from Egyptian territory are rare. Thursday's launch, if it came from Sinai, would be the first cross-border rocket attack from Egypt since the fall of the Hosni Mubarak regime last year. Rockets last hit Eilat and the nearby Jordanian town of Aqaba in 2010, killing one person and injuring four.
Source : Afghan Voice Agency (AVA), International Service