Mohammed Edwan, 23, was shot near the Qalandiya refugee camp, north of occupied East Jerusalem, the Palestinian health ministry said on Tuesday.
Edwan was reportedly in his vehicle when he was shot from close range with live ammunition, witnesses told Maan news agency, Al Jazeera reported.
His body remained in custody of the Israeli army before being handed over to medics at the scene, who then transferred Edwan to a hospital in Ramallah, where he was pronounced dead.
According to the health ministry, the three others who were wounded in the shooting were being treated at the hospital.
Local media reported that Israeli forces raided a number of Palestinian homes in several neighborhoods in the West Bank and that a crowd gathered in the area.
Two residents said soldiers arrived in the Qalandiya area early on Tuesday to carry out arrests and young men threw stones at them.
Three others inside the camp were detained as part of the wider arrest campaign, Maan reported.
The Israeli army said there was a "riot" during an operation in the nearby Kufr Aqab area, and "rocks and explosive devices were hurled at the troops, who responded with fire".
Qufr Aqab has been cut off from the rest of Jerusalem by Israel's separation wall, declared illegal by the International Court of Justice more than a decade ago.
The Israeli army frequently carries out wide-ranging arrest campaigns across the occupied West Bank on the pretext of searching for "wanted" Palestinians.
The Palestinian Authority, which has limited autonomy in parts of the West Bank, says such raids are a breach of agreements Israel has signed up to under the Oslo II Accord.
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