The two houses in the north-west town of Qalqilya were blown up with dynamite in a pre-dawn raid on Thursday.
Both buildings were once home to Samah Shubakhi and Muhammad Dura before their arrest last year in connection with the shooting of an Israeli girl.
Shaked Avraham, the daughter of Israeli settlers living in the illegal Negohot colony, died when her parent's caravan was sprayed with machine gun fire on 26 September 2003.
Both men were later linked to the Islamic Jihad resistance movement.
An army statement said the demolition - 13 months later - sent a "message to terrorists and their accomplices that there is a price to pay for their acts" and that the army would continue to hit them.
Since August 2002 the army has dynamited hundreds of houses in the West Bank and Gaza Strip.
The policy has been denounced by humanitarian organisations which consider it a form of collective punishment.
Meanwhile, a Palestinian civilian living in the northern Gaza Strip has died of wounds he suffered during the massive Israeli offence last week.
Medics confirmed the death of Muhammad Abu Hilayla from the Jabalya refugee camp on Thursday.
His death brings to 130 the number of Palestinians killed during the Israeli raid, launched late last month and scaled down on 15 October.
Since the start of the al-Aqsa intifada in September 2000, a total of 3476 Palestinians and 955 Israelis have died.