A military statement said that no soldiers were injured in the incident at Al-Fara Palestinian refugee camp, northeast of the city of Nablus.
"An assailant, armed with a knife attempted to stab soldiers on operational activity to arrest suspects," the English-language statement said.
"Forces called the attacker to halt and, upon his continued advance, fired toward him, resulting in his death."
It added that others in the camp hurled explosives and shot at the soldiers.
Since October 2015, 248 Palestinians, 40 Israelis, two Americans, a Jordanian, an Eritrean and a Sudanese have been killed, according to an AFP count.
Most of the Palestinians killed were carrying out attacks, according to Israeli authorities. Others were shot dead during protests or clashes, while some died in Israeli air strikes on the Gaza Strip.
Many analysts say Palestinian frustration with the Israeli occupation and settlement building in the West Bank, comatose peace efforts and their own fractured leadership have helped feed the unrest.
Israel says incitement by Palestinian leaders and media is a leading cause.
The Al-Fara incident comes less than 48 hours after a Palestinian rammed a truck into troops visiting a Jerusalem tourist site, killing four soldiers in a stark reminder of tensions despite a recent lull in violence.
The attacker was shot dead at the scene.