Palestinian security sources said that Hamad Abu Sharif, chief of the Al-Quds Brigades, was gunned down by troops in the old town of Nablus in the north of the West Bank early on Monday.
An Israeli military spokesman confirmed the death of a fighter, saying: "Soldiers operating in the old town opened fire on armed men killing one of them."
Two members of a Palestinian armed group, the Popular Resistance Committees, had been killed in an Israeli air strike early on Sunday.
Israeli and Palestinian sources said that the pair, implicated in the firing of rockets, had been targeted in the Khan Yunis area of southern Gaza.
Palestinian medical sources said that two teenagers were also shot dead during a major Israeli army raid on a refugee camp near Nablus.
According to an AFP count, the latest killing raised the overall toll since the September 2000 start of the Palestinian uprising to 4960, four-fifths of them Palestinians.