A 30-year-old man died in the resistance attack.
A baby girl was also killed and her parents lightly injured.
Aljazeera’s correspondent in the West Bank said no group had taken responsibility for the attack, in which the fighter died.
Palestinian fighters have regularly attacked the heavily-armed settlements, which they say function as outposts for an expansionist Israeli state, in the three-year-old Intifada.
All settlements in the West Bank and Gaza Strip are illegal under international law.
The incident came as the international community blamed both Israel and the Palestinians for not doing enough to advance the “road map” for peace.
After their first high-level talks on the Middle East “road map” since June, the quartet of United States, United Nations, European Union and Russia condemned Israeli settlement activity and also the continuing Palestinian attacks.
“Each party must do more to address, immediately and simultaneously, the core concerns of the other as described in the road map,” UN Secretary General Kofi Annan said, reading a joint statement.
The group also censured Israel, saying its “settlement activity must stop.”
The statement also noted with “great concern” the wall being built by Israel in a bid to stop the Palestinian attacks.
“It results in the confiscation of Palestinian land, cuts off the movement of people and goods, and undermines Palestinians’ trust in the road map process as it appears to prejudge final borders of a Palestinian state,” it said.
The group statement also condemned the “vicious terror attacks” by Palestinian fighters in the past two months and called on the Palestinian leadership to take “immediate, decisive steps” to clamp down on those planning them.
“Such actions are morally indefensible and do not serve the interests of the Palestinian people,” the statement said.
Annan said that both sides seemed unable to find their way out of the current quagmire without outside help.
“It seems to be that bold steps, in keeping with the road map, are now necessary to salvage peace. Small steps have not worked. They are unlikely to work in the future,” Annan said, on his own behalf.
The quartet reaffirmed its commitment to the road map, unveiled earlier this year. US Secretary of State Colin Powell agreed to send envoys more regularly to the region in a bid to get the peace process off the ground again.
The peace plan envisages the creation of a Palestinian state by 2005.
“The only alternative to the two-state solution is long-term conflict and instability,” Annan said.