Hezbollah attacked an Israeli military vehicle on Sunday afternoon near the border village of Avifim, a week after the party blamed Israel for a drone attack on its media centre.
The UN Interim Force in Lebanon on Sunday night said it received no reports of injuries from either side.
But other reports from Israel and Lebanon were contradictory.
The Israeli army denied Lebanese media claims that several Israeli soldiers had been wounded.
“Hezbollah fired two to three anti-tank missiles towards a military jeep in Avifim without causing injuries,” army spokesman Avichay Adraee said.
Hezbollah's initial statement said that Israeli soldiers had been “wounded and killed” and the group's Al Manar TV network reported that four Israeli soldiers had been wounded.
The privately owned TV channel Al Jadeed also disputed Israeli claims, claiming a reporter saw at least two wounded Israeli soldiers being moved after the attack.
Israel responded by firing more than 100 shells towards the source of the missiles in South Lebanon and helicopters hit other targets, Mr Adraee said.
The Lebanese army said Israel shelled the border towns of Maroun Al Ras, Aytaroun and Yaroun for just under two hours, causing forest fires.
There was no mention of Lebanese casualties and an Israeli military spokesman said the fighting was over by Sunday evening.
Al Manar TV’s live broadcast from the village showed smoke rising over the scrubland on the outskirts of the towns as Israeli shells hit the area.
The situation at the border appeared to have calmed by early Sunday evening.
“We have no injuries, not even a scratch,” Israeli Prime Minister Benjamin Netanyahu said. “Future action will be determined by how the events develop.”
Palestinian allies of Hezbollah congratulated the group for the attack. Al Quds Brigade, the military wing of the Palestinian Islamic Jihad group, called it a “heroic operation” that led to the “total destruction of a Zionist military vehicle”.
The Popular Resistance Committees in Palestine said Hezbollah’s attack was “a clear message about the resistance’s ability to respond to any Zionist incursion”.
There was celebratory gun fire in the Palestinian camp of Baddawi, in the north of Lebanon, after the attack on Israel, Lebanon’s state-run National News Agency reported.
As events were unfolding, Lebanese Prime Minister Saad Hariri called US Secretary of State Mike Pompeo and Emmanuel Bonne, a foreign policy adviser to French President Emmanuel Macron, asking them to intervene at the border.
Mr Netanyahu contacted the US and France, Israeli television reported.
UN Interim Force in Lebanon commander, Gen Stefano Del Col, urged Israel and Lebanon to “exercise maximum restraint”.
Before Hezbollah launched its mid-afternoon attack, two Israeli helicopters were flying low over the Shebaa Farms, a strip of disputed land close to the Golan Heights, NNA reported.
In the late morning, an Israeli drone entered Lebanese airspace and flew over Bastara, on the edge of Shebaa Farms, dropping incendiary material and causing a fire.
Israeli forces reportedly fired flare bombs at Shebaa Farms on Saturday, in a tactic sometimes used to burn away brush to prevent an ambush. The army said extra forces were being posted near the border.
The incident is the latest involving Israel and Lebanon over the past week.
Two drones crashed in Beirut's suburbs a week ago. Hezbollah said they were Israeli and were carrying explosives.
Lebanese soldiers, who do not have air defences, then opened fire at Israeli drones in southern Lebanon.
Israeli aircraft regularly enter Lebanese airspace but it is rare for the army to fire at them. Beirut has sent several complaints to the UN about Israeli drones and jets crossing its borders.
In a speech on Saturday evening, the leader of Iran-backed Hezbollah, Hassan Nasrallah, repeated the need to take action against Israel’s aggression.
Israel "must pay a price”, Nasrallah said.
He said field commanders had been given the order and limits for an operation, but it was up to them to decide the timing, location and scale.
Israel has not claimed responsibility for the drone incident but sources said the country carried it out to stop the transfer of sophisticated rocket technology from Iran to Hezbollah.
On Thursday, the Israeli army accused Iran of collaborating with Hezbollah to assemble precision-guided missiles that could cause massive casualties.
Nasrallah denied the accusation, saying it was “lies” to justify attacks on Lebanon and that the group did not have factories to make such missiles.