Palestinian security sources on Monday named the man as Khalid al-Hawi, 25, a local leader of the al-Aqsa Martyrs' Brigades, an armed group loosely affiliated with Palestinian leader Yasir Arafat's mainstream Fatah movement.
Three other fighters were also wounded by gunfire, Palestinian medics said.
The clashes broke out when dozens of Israeli occupation soldiers surrounded a house where members of the al-Aqsa Martyrs' Brigades had taken refuge, witnesses and security sources told reporters.
They said a column of around 30 tanks and jeeps had rolled into central Jenin shortly before 3:00 pm (12:00 GMT).
One helicopter was flying overhead and fired its machine-gun.
Exchange of fire
An Israeli military source said several Palestinian fighters had
opened fire on a force trying to arrest two wanted Palestinians.
"They (the Palestinians) opened fire at the force. One of them was killed during the exchanges while the second was injured. He was taken to an Israeli hospital and later on he will be brought before investigators," she said.
"During the activity two additional gunmen opened fire at the soldiers. Both were hit (by the Israelis) but they were only injured."