The cross-border violence immediately played into Israel's election campaign, which concluded earlier this week with Prime Minister Benjamin Netanyahu heading toward a record fifth term in office.
But Egyptian mediators intervened to avoid further escalation by persuading Israel to lift restrictions on the movement of goods and people in and out of Gaza and expand the breadth of Mediterranean waters where Gazans can fish.
The protesters are demanding an end to a blockade imposed on Gaza by Israel and Egypt, and want Palestinians to have the right to return to land from which their families fled or were forced to flee during Israel's founding in 1948.
Israel rejects any such return, saying it would eliminate its Jewish majority.
More than 200 Gazans have been killed by Israeli troops since the 'Great March of Return' started on March 30 last year, according to Gaza health officials. An Israeli soldier was also killed by a Palestinian sniper.
Last month's anniversary rally was smaller than expected, despite concerns that the event, during which four Palestinians were killed, would see a major escalation.
Israel seized Gaza in the 1967 Middle East War and pulled out its troops and settlers in 2005. It says its blockade is necessary to stop weapons reaching Hamas, which has fought three wars with Israel and fired thousands of rockets at it in the past decade.
Israel's use of lethal force at the border protests has drawn censure from the United Nations and human rights groups. U.N. investigators in February said Israeli forces might be guilty of war crimes for using excessive force.Israel says its troops have no choice because they are trying to stop militants breaching the fence and attacking Israeli communities nearby. Palestinians have also launched incendiary balloons and kites into Israel.Anna Ahronheim contributed to this report.