The soldiers, seeking to detain a Hamas militant, were confronted by around 50 Palestinians who hurled stones, petrol bombs and burning tires at them, an Israeli military spokeswoman said.
Israel and Hamas, the Islamist militant group which dominates Gaza, fought a seven-week war in July and August.
The medics named the dead man as 22-year-old Issa al Qitri, and said he had been shot in the heart in al-Amari camp near the city of Ramallah.
The Israeli military spokeswoman said he was shot while trying to throw an explosive device at the soldiers.
Palestinians want the West Bank, the Gaza Strip and East Jerusalem for a future state. Peace talks with Israel, which captured those territories in the 1967 Middle East war, broke down in April.-Reuters