Six of the wounded were Israeli soldiers, three of whom were reported to be in critical condition.
The director of Aljazeera's Palestine office, Walid al-Umary, said five of the wounded Palestinians were members of one family riding in a vehicle.
One of the Palestinians killed was 60-year-old Salah Abu Snainah, a driver who was close to the site of the explosion.
The other Palestinian fatality was identified as Ayad Abed Rabbo, 33, who succumbed to his injuries in a Jerusalem hospital.
Medical sources in Ram Allah said a two-year-old Palestinian child was in critical condition.
The explosion occurred during a heightened state of alert declared by Israeli border police. Initial investigations indicated that a booby-trapped bag containing ammunition and placed on the Palestinian side of the barbed-wire checkpoint was probably detonated with a remote-control device.
Thousands of Palestinians are forced to queue daily at these checkpoints, so that Israeli occupation forces can check their colour-coded indentity documents, which vary from region to region.
Along the wall
The explosion comes on the eve of an Israeli court decision on the separation wall.
According to AFP, the explosion occurred just 20 metres (yards) from the end of a trench being dug between the villages of A-Ram and Qalandia and ahead of the construction of another section of Israel's controversial West Bank barrier.
Al-Umary also said that there was no car bomb or human bomber as some news agencies had speculated.
After nightfall, Israeli forces sealed off the northern West Bank city of Jenin, in what appears to be another night of what Israel calls "raids".
At least a dozen tanks and a number of Israeli occupation army jeeps were seen at the entrance of Jenin, according to residents.
The Al-Aqsa Martyrs Brigades later claimed responsibility for the blasts.
"We have done this in response to the genocide that the Israeli authorities are perpetrating in the Gaza Strip and West Bank," Zakaria Zubaidi, leader of the Brigades in Jenin, told AFP.
Security forces had been on a high state of alert in Jerusalem following intelligence that an attack in the area was imminent, Israel radio reported.
The blasts came hours after the Israeli army withdrew from the Khan Yunis refugee camp in the southern Gaza Strip following an overnight occupation and airstrike in which at least 15 Palestinian civilians were wounded.
"Our troops left the Khan Yunis refugee camp this morning at around 0600 (0300 GMT)," an Israeli army spokesman said.
Israeli helicopter gunships fired
into a refugee camp injuring 15
Palestinian medical sources had earlier announced that 15 people were wounded in the operation when an Israeli helicopter gunship fired missiles at homes in the refugee camp.
Medics said three of the casualties were in a critical condition at Nasser hospital in Khan Yunis.
Shortly before the strike, around 20 Israeli army tanks, jeeps and bulldozers moved into the western side of the camp and began destroying houses.