Security sources confirmed Imad Janadra died north of Nablus, near the village of Taluza, on Wednesday evening but gave no details.
The 30-year-old was a senior official in the Izz al-Din al-Qassam Brigades, an armed resistance wing of Hamas.
However, another senior Hamas figure was released in occupied Gaza just hours before the fatal shooting.
Muhammad Taha was one of the founders of the Islamist resistance group in 1987, but was captured by Israeli forces during a raid on the Buraij refugee camp in central Gaza in March 2003.
Despite his senior age, Taha was reportedly beaten and arrested with three of his sons after occupation forces stormed his house in March 2003.
Palestinian FM Nabil Shaath (R) to
meet Israeli counterpart in Dublin
The shooting and the release come as both Israeli and Palestinian foreign ministers prepare to face each other in Dublin.
Israeli Foreign Minister Silvan Shalom and his Palestinian counterpart Nabil Shaath were among around three dozen ministers converging in the Irish capital for a Euro-Mediterranean meeting convened by the European Union.
Topping their agenda were prospects for the "road map" peace plan, the situation in Iraq and also European relations with the wider region also being discussed, an EU official said.
The event is sandwiched between Tuesday's meeting in New York of the diplomatic Quartet of Middle East peace sponsors and a summit of the Arab League in Tunisia later this month.