The body of Muhammad Mahmud Abu Kibar, who was hit in the head in the village of Aqraba, was handed to Palestinian medics by Israeil forces, the sources said.
According to Aljazeera's correspondent, Abu Kibar was shot when he opened the door to his house. Israeli forces were looking for his wanted brother.
Israeli public radio, citing military sources, said the victim had been killed during a raid by an Israeli unit on a house where members of Palestinian leader Yasir Arafat's Fatah movement had taken cover.
Two activists were arrested during the raid, it added.
On Saturday, a 12-year old Palestinian girl died after being shot in the head when Israeli troops opened fire on the Amal quarter of the city of Khan Yunis in the southern Gaza strip.
The latest death brought the overall toll since the September 2000 start of the Palestinian uprising to 3900, including 2933 Palestinians and 898 Israelis, according to an AFP count.