Amjad al-Saadi, 28, a leader of Palestinian President Yasir Arafat's Fatah armed faction, al-Aqsa Martyrs Brigades, was killed on Tuesday, our correspondent said.
He quoted witnesses as saying that the soldiers could have arrested al-Saadi, but they did not.
The latest death brings the overall toll since the start of the intifada in September 2000 to 3631, including 2711 Palestinians and 854 Israelis, according to an AFP count.
Meanwhile Israeli forces, backed by more than 20 military vehicles, raided Jenin city and its refugee camp early on Tuesday at 3.00am (Palestine local time), closing many areas there.
The forces moved from Qadeem settlement in eastern Jenin and set up ambushes targeting the resistance fighters in the city and the refugee camp.
But according to our correspondent, their attempts did not come through as people of the city, particularly resistance fighters, were aware of the army's movements.
Violent clashes have erupted later between the soldiers and fighters of al-Aqsa Martyrs Brigades and al-Quds Brigades.
The Israeli army has also searched the houses of relatives of Zakaria al-Zubaidi, a leader of al-Aqsa Martyrs Brigades, our correspondent said.
Israeli forces have also launched search operations inside many houses in the area, claiming they were looking for "wanted activists".
An Israeli army search while
looking for activists
They also raided al-Harithya area and demolished houses of members of the Islamic Jihad resistance group.
One of the two, Salih Jaradat, who was held responsible by Israel for a series of attacks, was killed by the army in June while the second man, Iyad Jaradat, was currently in Israeli detention, one security source added.