The activist from Palestinian leader Yasir Arafat's Fatah movement was shot on Friday Israeli military sources told AFP.
He was subsequently transferred to an Israeli hospital where he died.
There was no immediate word on his identity.
A Palestinian was also killed by Israeli fire in the village of Haja, west of the West Bank city of Nablus late on Thursday, Palestinian security sources said.
Muhammad Khamis Raaba, 22, was shot in his car when a jeepload of troops opened fire on stone-throwing demonstrators during an incursion into the village, the sources said. A passenger in the vehicle was also wounded.
The latest deaths brought the overall toll since the September 2000 start of the Palestinian intifada, to 4,171, including 3,175 Palestinians and 925 Israelis, according to an AFP count.
Palestinian home demolished
The Israeli army also blew up the family home of a Palestinian resistance fighter on Friday.
Hundreds of Palestinian homes
have been demolished by Israel
He had been arrested over a fatal shooting attack on a Jewish settler in the northern West Bank, witnesses said.
Soldiers used dynamite to demolish the home of Habib Abu Abid, a member of al-Aqsa Martyrs Brigades, in the village of Yabad which lies close to the town of Janin. The two-storey house was home to around 20 people.
The settler, 49-year-old Victor Kreiderman, was killed in an ambush last Sunday as he drove his vehicle near the Palestinian village of Kfar Yabed, close to the Jewish settlements of Mevo Dotan and Shaked.
Several hundred houses have been destroyed in the West Bank and the Gaza Strip since the Israeli army began its policy of demolishing the homes of Palestinians in August 2002.
The policy has been widely condemned by human rights groups and the international community as amounting to collective punishment, but Israel argues that it serves as "a message” to Palestinians.
Meanwhile, the Israeli army said on Friday it had arrested 14 wanted Palestinians in a series of overnight invasions.