The project provides an example of growing scientific co-operation between the two sides in the Arab-Israeli conflict.
The scientists want to create more male fish because they are larger, grow faster and weigh about a third more than females.
This makes them a much more valuable source of food, said Mutaz Qutob, a Palestinian researcher involved in the experiments.
As part of a project with Israel's Hebrew University and Germany's University of Hohenheim, Qutob and his colleagues will inject compounds from plants - found in the occupied West Bank and often used as seasonings - into food fed to newborn Nile Tilapia fish.
"This will have an effect on the fish's metabolic [structure] - it may shift from female to male," said Qutob, a chemist at al-Quds University in East Jerusalem.
"This is a very important project. We are introducing a new food source for the Palestinians."
Scientists at the Hebrew University had previously used synthetic steroids, which are regarded as less healthy, to create male fish, said Berta Sivan, an Israeli researcher who helped found the project.
Palestinians in the West Bank import most of their fish from Israel and the coastal Gaza Strip.
"We wanted to solve a fish-breeding problem in Israel and help bring in and promote fish consumption in the Palestinian Authority"
Berta Sivan, a researcher at the Israeli school
But their consumption of fish, especially those from fresh water sources, has fallen in recent years due to rising prices and tighter Israeli travel and trade restrictions on Palestinians.
"We wanted to solve a fish-breeding problem in Israel and help bring in and promote fish consumption in the Palestinian Authority," Sivan said.
While Israel has been building a controversial separation barrier in the West Bank, co-operation between Israeli and Palestinian academics has been growing over the past few years despite a Palestinian uprising that began in 2000.
"Israelis and Palestinians who co-operate on research tend to try to work harder during politically critical times," said Hassan Dweik, a co-director of the Israeli-Palestinian Science Organisation (IPSO), which helps find funding for such studies.
The IPSO this year received 74 proposals for academic projects to be conducted by Israeli and Palestinian researchers on topics related to agriculture, education, the environment and and medicine.
Israelis and Palestinians usually conduct their research separately and discuss it by phone or online due to the Israeli travel restrictions that also ban most Israelis from entering Palestinian-controlled areas.