It was the third deadly arrest operation in less than a week.
Border police forces entered the Qalandia refugee camp near Ramallah to arrest two “suspected terror activists”, police said.
One of them was shot in the leg as he was running away across a roof, then fell to his death as he tried to leap to another roof, they added.
Palestinians identified the dead man as Mohammad Abu Latifa, 18.
According to sources in Qalandia, the Israeli forces raided the camp shortly before dawn, with clashes breaking out following the incident.
Police said the forces had called on Abu Latifa to stop, before shooting at his lower limbs.
“Despite that, the suspect continued to run and when he attempted to get to the roof of another building, he fell off it and was mortally wounded,” a statement said.
A paramedic with the troops attempted to treat Abu Latifa, but was forced to pronounce him dead at the scene, police said.
A Ramallah hospital source told AFP that Abu Latifa was “shot with three bullets, two in his thighs and one in his left leg”.
The source said the cause of death was loss of blood.
Police said the two men targeted in the raid were suspected of having “planned a terror attack in Israel”.
Abu Latifa was buried in Qalandia later on Monday and masked Palestinian militants at the funeral fired bursts from automatic weapons into the air.
In clashes with Israeli security forces that followed the funeral, two Palestinians were lightly wounded in the legs by gunfire and another four by rubber bullets, Palestinian medical services said.
Israeli authorities had no comment.
On Thursday, Israeli forces shot dead a Palestinian in the southern West Bank while attempting to arrest his son.
And on Wednesday, troops shot dead a Palestinian during clashes near the northern West Bank city of Jenin.
Israeli authorities say the arrest raids are necessary to detain suspects and that troops can face dangerous rioting during such operations.
Palestinians, however, condemn the raids in the occupied territories, and the Hamas and Islamic Jihad militant groups hinted at revenge after Thursday’s death. -AFP