Aljazeera's correspondent quoted the Islamic Jihad as announcing the death of two of its activists, including a leader of al-Quds Brigades in the West Bank, Nidal Abu Saada, in a military operation launched by Israeli soldiers on Tuesday in Araba village, south of Jenin.
Four other Palestinians were injured during clashes after 20 Israeli military vehicles stormed into the village and laid siege to a building.
An Israeli army spokeswoman said that Tuesday's incident in which the two Palestinian fighters were killed also caused an unknown number of Israeli casualties.
Israeli border police entered the village to arrest suspects from the Islamic Jihad organisation, which has been responsible for the last six bombings in Israel, an Israeli army spokeswoman said.
"An exchange of fire erupted between two Islamic Jihad terrorists and the border police force in which these two Islamic Jihad terrorists were killed. There were also casualties on our side," she said.
She refused to provide any further details on the Israeli casualties.
Also on Tuesday, Aljazeera said, Israeli occupation forces arrested 22 Palestinians in various parts of the West Bank.
The campaign of arrests focused on Bani Zaid village and Jalzun camp in the Ram Allah governorate. It covered as well a number of villages south of Qalqilia and west of Bethlehem.
Most of the arrested Palestinians were activists of Hamas, Fatah, Islamic Jihad and the Popular Front for the Liberation of Palestine, Aljazeera's correspondent said.
Palestinian witnesses said an Israeli soldier was also wounded in the shootout and evacuated by helicopter to an Israeli hospital.
Later in the day, al-Quds Brigades said it fired two missiles at the Israeli Negev township of Sderot, north of Gaza Strip, and described the operation as its initial response to the Israeli operation.