The arrest of Muhammad Barghuthi, the Palestinian labour minister, early on Thursday came amid an Israeli army incursion into the Gaza Strip to try to release a soldier kidnapped during a cross-border raid by Palestinian armed groups on Sunday.
An Israeli army spokeswoman said troops had carried out an operation in Ram Allah but declined to give details.
The Israeli news website, Ynet, said troops took Barghuthi into custody at a roadblock, and that soldiers had deployed in several streets in a Ram Allah neighbourhood.
Israeli soldiers conducted arrests around Ram Allah on Wednesday, apparently during a search for a missing Jewish settler whom a Palestinian militant group claims to have abducted.
Israel briefly detained another Hamas cabinet member in April, after stopping his car in an area of the occupied territory where Israel restricts Palestinian movement.
Hamas took over the government in March after winning parliamentary elections.
Israel fires missiles
Israeli aircraft have been hitting
Meanwhile, Palestinian security officials said that Israeli aircraft fired missiles at suspected Palestinian fighters in the southern Gaza city of Khan Yunis early on Thursday.
There was no immediate word on damage or casualties. The Israeli military had no comment.
An AP Television cameraman saw a 6m (20ft) hole in the road in the eastern part of the city where the missile struck.
Israeli aircraft have been targeting bridges and roads in southern Gaza to try to impede fighters from moving a captured Israeli soldier.
The Israeli military said there were three airstrikes in southern Gaza, all aimed at roads, to stop the soldier from being moved and to cut off access to fighters launching rockets at Israel.