"At approximately midnight, the body of a 17-year-old Bedouin was found by a family member," Micky Rosenfeld, a police spokesman, said.
"The investigation is continuing to establish who is behind the killing.
"We are examining the bullets and type of gun, trying to find out who was behind [the shooting]. Everything is open at the moment," Rosenfeld said.
A number of violent attacks by settlers have been reported in the West Bank in recent months.
On September 13, Jewish settlers rampaged shot and wounded four people in a Palestinian village after a nine-year-old Israeli boy was stabbed in a nearby settlement.
Earlier this month, Matan Vilnai, Israel's deputy defence minister, acknowledged that there had been "a dramatic increase in riots in the territories against the Palestinians and IDF [Israeli army] soldiers".
Human rights group have also said that there has been a sharp rise in attacks by settlers and have criticised Israeli security forces for standing by during the violence.
Palestinian officials and international leaders have repeatedly condemned the expansion of Jewish settlements inside the occupied West Bank and East Jerusalem saying that they are a serious obstacle to the peace process.
The West Bank has been under military occupation by Israel since 1967 and at least 400,000 Israelis have been settled in the territory, including East Jerusalem.
The settlements are illegal under international law, although Israel disputes this.