Medics and witnesses identified the man as Abd-al Nasir Abu Shoka, 36, who was a member of Hamas' military wing.
Witnesses spotted Israeli helicopters hovering over Bureij refugee camp shortly after the blast killed Abu Shoka on Thursday evening.
Messages which blared from local mosque loudspeakers accused Israel of assassinating the leader.
However, an Israeli military source said the army suspected Abu Shoka died in an accident while preparing an explosive.
An Israeli army spokeswoman said later there were no troops in the area at the time of the blast.
Palestinian security officials said they were investigating whether he was killed preparing a bomb or was the victim of a booby-trapped package that exploded.
But, the Izz al-Din al-Qassam Brigades, the armed wing of Hamas Movement, issued a statement late on Thursday saying an Israeli helicopter had fired a rocket at Abu Shoka's house, killing him, our correspondent reported.
The statement vowed retaliation for Abu Shoka's assassination and to continue resisting the Israeli occupation.
Israeli soldier injured
The incident occurred shortly after an Israeli army officer was shot and seriously wounded during a raid in the West Bank.
The soldier was wounded in Burkin village, several kilometres west of Jenin, security sources on both sides said.
Shortly after the shooting, about 30 Israeli jeeps, tanks and armoured personnel carriers moved into the village and surrounded a number of houses, provoking exchanges of fire with Palestinian resistance fighters.