A medical source said the man from Islamic Jihad died on Friday morning from injuries sustained in an overnight Israeli air raid over the southern Gaza Strip.
Muhammad Abd al-Al was the first Palestinian to be killed during a massive Israeli offensive against Gaza which started before dawn on Wednesday in an attempt to secure the release of a captured Israeli soldier.
Another Palestinian fighter was shot dead by Israeli troops in an arrest operation in the northern West Bank city of Nablus and another three gave themselves up.
Medical sources named the dead man as Mahmud Zukiri, 23, who belonged to al-Aqsa Martyrs' Brigades faction.
The three men who surrendered to troops also belonged to al-Aqsa, which is loosely affiliated to the Fatah movement of Mahmoud Abbas, the Palestinian president.
Israel revoked the Jerusalem residency of four senior Hamas officials, including one cabinet minister, in an unprecedented punishment that takes away their right to live in the holy city and travel freely within the country.
Aljazeera reported that the residency rights were revoked for Khalid Abu Arafa, the Hamas cabinet minister for al-Quds affairs, and three members of the Palestine Legislative Council.
The four were among scores of Hamas ministers and MPs arrested two days ago by the Israeli occupation army.
A lawyer from the legal firm handling the case said his firm will file an appeal to the Supreme Court in Israel seeking an annulment of the decision.
Interior ministry attack
Israel pounded the Gaza Strip with a series of 30 overnight air raids, setting the Hamas-controlled interior ministry ablaze. The ministry has nominal responsibility for the Palestinian security forces.
The military claimed the targets were "used by terror organisations to attack Israel" and were known to be empty at the time of attack.
Israeli damage to the Palestinian
interior ministry building
The office of Siad Siam, the interior minister and a senior Hamas leader, was specifically attacked, the army said.
Two Hamas training camps were struck, as was another used by al-Aqsa Martyrs' Brigades, an armed faction connected to the Fatah movement of Mahmoud Abbas, the Palestinian president.
An al-Aqsa weapons storage site was hit in Gaza City, along with a Hamas office in the Jabaliya refugee camp while the air force bombarded 22 access routes and open areas used by Palestinian fighters to fire rockets towards Israel, a spokesman said.
Tahir al-Nunu, a Palestinian foreign ministry spokesman, said the Palestinian government was still seeking a diplomatic solution to end the crisis.
There has been no sign of life from Shalit since his abduction on Sunday. The Popular Resistance Committees - one of the groups holding him - did not confirm his condition in a statement released on Thursday, but insisted on swapping him for Palestinian prisoners held in Israeli jails. Israel has rejected that deal.