Ihab Shattat was shot in the chest as he went to buy ice cream at a local shop in Bait Hanun on Saturday.
The boy's father, Abd al-Karim, said he had rushed out of his house as soon as he heard the gunshot - only to find his son's body just 20 metres away from home.
The Israeli army said it would investigate the report.
Medics who attempted to keep Ihab alive confirmed that a second Palestinian had also been rushed to al-Awda hospital with similar gunshot wounds.
The 24-year-old, whose identity is not yet known, was seriously wounded after throwing stones at occupation troops at the southern entrance to the town.
An Israeli military source said soldiers fired warning shots into the air before using live ammunition at Bait Hanun.
Shortly before the shootings, several hundred mourners had gathered in Bait Hanun to bury a 22-year-old Palestinian - who had been killed during clashes with soldiers in the town on Friday.
The Palestinian town of 30,000 has been besieged by Israeli forces for several days since two Israelis - one a three-year-old boy - died in a rocket attack that had targeted Israeli PM Ariel Sharon in Sderot.
Wounded youth dies
Elsewhere, a 19-year-old Palestinian man who was wounded during an Israeli raid on Gaza City last May, succumbed to his injuries and died on Saturday, Palestinian sources at Shifa Hospital said.
Yusuf Nasr Allah was injured during a raid launched by Israeli occupation forces in the Zaitun district.
Also late on Saturday, Israeli occupation forces announced killing a Palestinian resistance fighter near the illegal Israeli settlement of Har Bracha.
Israeli sources claimed that the fighter had opened fire on them and their return fire killed him.
There was no immediate claim of responsibility and the Palestinian resistance fighter's identity remains unknown.
More deaths likely
Meanwhile, an Israeli military source has said that the soldiers could remain in the Bait Hanun area for months to prevent any similar attacks in the future.
No family in beseiged Bait Hanun
can afford to relax for a moment
At least three Palestinians died in confrontations with soldiers in both northern Gaza and in the southern town of Rafah along the Egyptian border on Friday.
Violence has surged in the Gaza Strip, an area barely twice the size of Washington DC and in which 1.3 million Palestinians and 7,500 illegal Israeli settlers live.
However, Israeli Prime Minister Ariel Sharon has put forward a plan to evacuate occupation troops and colonists from Gaza by the end of 2005.
Several US officials are due to visit Israel on Saturday to discuss Sharon's plan.
Deputy National Security Adviser Stephen Hadley and Middle East desk chief Elliott Abrams will meet Israeli and Palestinian officials.
The meetings come after National Security Advisor Condoleezza Rice stressed on Friday - during her meeting with Foreign Minister Silvan Shalom - that the US expects Israel to evacuate all illegal settler outposts in the West Bank.
However, many of the attempts at evacuation have met with vehement resistance from settlers, who very often return to set up dismantled outposts once occupation forces have left.