European lawmakers and other pro-Palestinian activists aboard — including one former Canadian MP — did not resist, and the Finnish-flagged vessel was diverted to an Israeli port.
The trip by the ship, Estelle, marked the latest challenge to the air, land and sea embargo of Gaza that Israel imposed after Hamas seized the territory in 2007.
Israeli officials say they need to enforce the blockade to prevent weapons smuggling. Meanwhile, Hamas called for more attempts to break the sea blockade.
Israeli Prime Minister Benjamin Netanyahu issued a statement praising the military for enforcing the blockade, said there "is no humanitarian crisis in Gaza" and accused the activists of trying to "to provoke and slander Israel's name."
"If human rights were really important to these activists they would have sailed for Syria. We will continue to protect our borders," he said.
Six Israeli naval vessels stopped the Estelle when it was about 30 nautical miles from Gaza. Masked soldiers boarded the ship and ordered it to sail to Israel's Ashdod port, said a spokeswoman for the activists.
The vessel arrived at port Saturday night and was to be inspected to see what was on board, the Israeli military said. Israel's Interior Ministry said the activists on the ship would be questioned by immigration officials and deported to their home countries within 72 hours.
The Swedish-owned Estelle left Naples, Italy, on Oct. 7 with about 30 people from eight countries, including Israeli activists, lawmakers from Norway, Sweden, Greece and Spain, and 79-year-old former NDP MP Jim Manly.
"We are committed to non-violence. We are committed to raising the illegal siege of Gaza. We think that it is important for the Canadian government to stand up for our rights," Manly said in a pre-recorded video statement which was to be released if the ship was intercepted.
The retired politician also said he hoped Canadians would contact the government to highlight the activists' innocence.
"Ask them urgently to insist with the Israeli government that it respect our human rights, our legal rights."
Manly's son issued a statement Saturday afternoon saying his father, who is also a retired United Church minister, was in Israeli custody
"While he is in good health for his age, he is not as resilient as he was in his youth and has medication he needs to take daily. I hope that the Israeli Defence Forces respect his human rights and legal rights and treat him with the respect and dignity he deserves," said Paul Manly.
Jim Manly's wife Eva has said her husband was on the Gaza-bound vessel to bring attention to "the suffering of the Palestinians of Gaza." She said she lost contact with Manly early Saturday.
"It's hard to imagine what threat one sailboat, loaded with humanitarian supplies and a small number of people, could do to" Israel's mighty military, she said.
The Harper government has been critical of similar missions in the past, calling them unhelpful.
A similar flotilla in 2010 ended in bloodshed — nine people were killed and 45 injured after Israeli soldiers boarded a Turkish vessel trying to break the blockade.
Ottawa warns Canadians against all travel to Gaza, saying the security situation along the coast remains volatile.
Israeli military spokeswoman Lt. Avital Leibovich accused the activists on Saturday of staging a provocation.
"We have this blockade because there are constant smuggling attempts of weapons, munitions that eventually reach the hands of terror organizations inside Gaza," she said.
Over the past decade, Gaza militants have fired thousands of rockets and mortar rounds toward Israeli border towns.
Although Hamas and Israel have maintained an unwritten truce for more than two years, violence occasionally flares in the area. Most recently, an Israeli strike on a prominent al-Qaida-inspired jihadi prompted two days of tit-for-tat rocket fire and strikes last week.
Victoria Strand, a spokeswoman for the activists, said the takeover of the Estelle by Israeli forces was a "demonstration of ruthlessness."
The ship was carrying cement, basketballs and musical instruments, Strand said. It was emblazoned with "Ship to Gaza" on one side, and also flew the colourful red, green, black and white Palestinian flag.
Israel, aided by Egypt, closed Gaza's borders after Hamas seized control and drove out forces loyal to Palestinian President Mahmoud Abbas more than five years ago. Israel eased its restrictions after its raid of a Turkish-led blockade-busting flotilla in 2010 left nine activists dead and sparked international condemnation.
Still, Israel continues to block sea access to Gaza and severely restricts its ability to export goods and import raw materials.
Activists say the blockade amounts to collective punishment of Gaza's 1.6 million residents, denying them the chance to trade and travel freely. Neighboring Egypt continues to impose restrictions at its passenger crossing with Gaza.
The blockade has deepened the hardships in Gaza, where three in four residents rely on U.N. food aid to get by, according to U.N. figures.
Israeli Defence Ministry spokesman Joshua Hantman said the goods onboard would be checked before entering Gaza through the Israeli-controlled land crossing, Kerem Shalom.
He said Israel allows some 50,000 tons of goods into Gaza every week. Gaza residents also use dozens of smuggling tunnels linked to neighbouring Egypt to bring in contraband goods, particularly construction materials.
Hantman said militants have tried in the past to smuggle weapons into Gaza by sea. In 2011, a vessel carrying 50 tons of weaponry sought to reach Gaza, while in 2009, a boat tried to bring in some 500 tons of weapons, he said.
A Hamas spokesman condemned Israel's actions as "piracy."
"This confirms that the (Israeli) occupation is maintaining its control and isolation of Gaza. There must be more flotillas of solidarity activists to Gaza," said Fawzi Barhoum.
— with files from Associated Press writers Ibrahim Barzak in Gaza City, Karl Ritter in Stockholm and The Canadian Press.Suggest a correction