According to Israeli security sources, the two men were privately employed guards at the controversial barrier which passes through the neighbourhood of Abu Dis.
They died on Saturday at the site, the security sources said. The two guards were driving in a car when they were attacked, Israel radio said. The gunman or gunmen escaped with the guards' weapons as police and soldiers launched a manhunt, army radio said.
Palestinian security sources said that soldiers in 10 jeeps raided a Palestinian police station in the area after the attack and took over a Palestinian checkpoint there.
Israel says the barrier is being built to keep out "Palestinian suicide bombers" who have killed hundreds of Israelis during a three-year-old uprising.
But Palestinians say the wall, which cuts deep into the territory, is aimed at predetermining the borders of their future state and driving them out of fertile areas.
Palestinians and Israelis
demonstrate against the wall
A survey released on November 11 by the UN Office for the Coordination of Humanitarian Affairs (OCHA) noted that the barrier only conforms to Israel's recognised boundary on 11% of its planned route.
The latest deaths bring to 3620 the number of people killed since the outbreak of the Palestinian uprising in September 2000, including 2700 Palestinians and 854 Israelis.