Palestinian medical sources said Iyyad Hashash, a 19-year-old al-Aqsa Martyrs' Brigades resistance fighter, suffered critical injuries when the bomb he was trying to throw at troops in the camp exploded prematurely.
He died shortly afterwards.
The incident occurred during a gun battle between Israeli soldiers and Palestinian fighters that was sparked when scores of troops pushed into the camp to arrest wanted fighters.
Security officials said three tanks surrounded the camp and about 45 Israeli Jeeps and trucks entered.
As the shooting continued, troops conducted house-to-house searches for fighters, they said.
Hashash's death raised to 4905 the overall toll since the Palestinian intifada or uprising began in September 2000, more than three-quarters of which have been Palestinian.
The al-Aqsa Martyrs' Brigades is affiliated to Palestinian President Mahmoud Abbas' ruling Fatah party.
There was no immediate comment from the Israeli army.