The confrontation in the West Bank village of Bait Sira followed a day of protests along the barrier which soldiers quelled with teargas in some instances.
Witnesses said Palestinian farmers and supporters in Bait Surik tried to prevent army bulldozers from razing an olive grove to make way for a new section of razor-tipped fence.
Bait Surik's mayor, Muhammad Qundial, said more than 50 residents were injured, including elderly people.
Israeli police spokesman Gil Kleiman said security forces used stun grenades and teargas to disperse the crowd.
Three policemen were slightly hurt and five Palestinians and one Israeli were arrested, Kleiman said.
About 100 villagers tried to stop two bulldozers by lying down in front of them, but they were dispersed by Israeli border police who used sound grenades and beat them with sticks, an AFP reporter witnessed.
Israeli soldiers also hit some of the protesters with the butt of their assault rifles, and several suffered head wounds.
Olive trees razed
Under heavy army protection, the bulldozers razed a 150m row of olive trees to draw the path for the barrier.
"The bulldozers are still tearing up the land, it's a dark day for Bait Surik," the mayor said.
"We were caught by surprise when the bulldozers came this morning," he said, adding 60 hectares (150 acres) of Bait Surik's most fertile land would be caught on Israel's side of the fence.
A Palestinian woman protests as
a bulldozer works on her land
"We are known in the whole West Bank for growing the juiciest peaches and now we will be deprived of our peach trees and of our olive trees," he said in an emotional voice.
The work in Bait Surik also started as Israeli Prime Minister Ariel Sharon was quoted by Yediot Aharonot newspaper as saying he would complete "his security fence" regardless of the opinion of the ICJ.
"We will not surrender. I will build the security fence and will complete it, as the cabinet decided," he said.
Most expensive project
He also slammed the ICJ hearings, held at the behest of the UN General Assembly, saying: "What is in motion at The Hague is an attempt to deny Israel the fundamental right to defend itself."
Israel's army radio said the Bait Surik section of the fence was being built as part of a larger 96km stretch between the Elkana Jewish settlement and the Ofer detention camp in the north-western West Bank.
Israeli forces used butts of their
guns to hit some protesters
It also quoted army officials as saying a total of 200km of barrier would be built by the end of the year, including the section that surrounded Jerusalem.
Some 180km have been built since construction started in June 2002 and the barrier, which is to run on 730km, is planned to be completed by the end of next year.
At an estimated cost of $3.4bn, it is Israel's most expensive project.
Israel says the bulwark of fences and walls, which runs 180km so far and is to stretch over 700km is a stopgap security measure intended to keep out Palestinian bombers in the absence of peace talks.
Palestinians say the barrier, by snaking well into the West Bank and taking in Jewish settlements, is intended to annex territory that Israel occupied in a 1967 war, but which they claim for a viable state under a US-backed peace plan.
"We are known in the whole West Bank for growing the juiciest peaches and now we will be deprived of our peach trees and of our olive trees"
Mayor, Bait Surik
Monday's protests were staged as part of a Palestinian Day of Rage coinciding with the start of the world court hearing in The Hague into whether the barrier is illegal and should be torn down, as argued by the Palestinians.
Israel boycotted the hearings, contending the barrier is a security issue beyond the court's jurisdiction.