Israeli army officials said soldiers shot the man on Saturday after he refused calls to stop, ignored warning shots and fled from troops.
There was no independent confirmation of the claim. Palestinians accuse Israeli soldiers of often deliberately shooting civilians and then claiming they were resistance fighters.
The military said the man, Muhammad Hamad, 23, was lightly wounded in the leg.
But a reporter with the Associated Press said he saw the man's body in a hospital morgue with two gunshot wounds to the chest.
Palestinian Prime Minister Ahmad
Quraya must form a cabinet soon
Saturday also saw Palestinian leaders welcome an Israeli suggestion of a talks with Palestinian Prime Minister Ahmad Quraya.
It was a reversal of earlier statements where Israeli officials refused to deal with Quraya, saying he was too close to President Yasir Arafat.
But Palestinian leaders said any negotiations must come with efforts to stop violence and halt Jewish settlement building on Palestinian land.
"Those who want to resume a meaningful peace process, resume negotiations, must stop settlements, must stop walls, must stop the fait accompli policies ... and give the peace process the chance it deserves," Palestinian chief negotiator Saib Uraiqat said.
Deadline for cabinet
A new round of meetings also depends in part on whether the Palestinians can complete the formation of a new government in the coming days.
Quraya, who currently leads an emergency government with a one-month mandate, has until Tuesday to form a full cabinet.
On Friday, Israeli media reported that Defence Minister Shaul Mofaz also planned to hold meetings next week with Palestinian officials.
Meanwhile, legislators from Arafat's Fatah faction met Saturday in Ram Allah and chose a top Fatah official as their candidate to be parliament speaker, a position Quraya left vacant when he became prime minister.
The nominee, Rafiq al-Natchi, a former ambassador to Saudi Arabia and former labour minister, was the most likely candidate to become the new speaker.