Around 40 Israeli army jeeps and armoured trucks entered the administrative capital of the Palestinian territories shortly after 6:30 pm (1630 GMT) Tuesday and imposed a curfew in the centre of the city.
Troops surrounded the landmark Abd al-Nasir mosque, Palestinian security sources and witnesses said.
People inside the mosque were told to leave in groups of four and present their identity papers to the soldiers.
But many worshippers have decided to stay put, said peace activists from the International Solidarity Movement (ISM) in the city, leading to a stand-off with soldiers.
Medical sources said five people had been slightly injured after the Israelis opened fire with rubber-coated bullets after they were pelted with stones.
An Israeli military source confirmed that forces had entered the city. He would not give the size of the troop presence but said it was "not a large force".
"We are conducting searches but there are no details of any arrests."
Some of the Israeli troops entered the Aljazeera office in Ram Allah and asked the staff to close the doors and remain indoors. Journalists inside were also told not to step out.
A few Israeli soldiers entered the
A curfew has also been imposed on al-Bera, Beit Zeyt and Kofr Malik.
Live Aljazeera footage showed troops taking up positions in the centre of Ram Allah. Gunfire could be heard.
Palestinian sources also said around 10 Israeli jeeps had entered the nearby university town of Beit Zeyt, close to where a group of Israeli occupation soldiers was ambushed by resistance fighters on Sunday night.
Three of the soldiers were shot dead in the attack by the Al-Aqsa Martyrs' Brigade.
Ram Allah is home to Palestinian leader Yasir Arafat, who has been confined to his headquarters, known as the Muqata, for almost two years.
Israel has repeatedly threatened to expel Arafat in recent months accusing him of directing "terrorism".
ISM sources near the Muqata said there was no sign of any forces near the compound.