Reuters news agency said two Palestinians were killed in the exchange of fire.
Micky Rosenfeld, an Israeli police spokesman, described the incident as a "terrorist attack".
He said: "The police and the army are searching the area for the attackers."
Later, Israeli forces and al-Quds Brigades clashed outside a hospital in Hebron where the Israeli army was searching for Palestinians wounded in that operation.
In an overnight raid in the town of Ramallah, Israeli forces shot and killed a bodyguard for Ahmed Qureia, the chief Palestinian negotiator.
Israel has called on Mahmoud Abbas, the Palestinian president, to meet his obligations under a 2003 "road map" peace plan to tackle fighters operating in the West Bank.
The Palestinians say they are meeting their obligations by launching a security clampdown in the area.
And Israel has yet to meet its own road map obligations to freeze settlement construction.