'Dozens of Palestinians arrived at the area of Qusra southeast of Nablus and began rolling burning tyres and throwing rocks at security forces,' an army statement said. '(Israeli) soldiers and border policemen responded by using crowd-control means in order to disperse the riot,' it added, saying they had declared the area a closed military zone.
The Palestinian village of Qusra is close to the settlement of Migdalim.
Settlers and the army said Palestinians had thrown stones at the man before he fired on them.
Some 400,000 settlers live in the West Bank alongside around 2.6 million Palestinians.
A wave of violence in Israel and the Palestinian territories that began in October 2015 has killed at least 309 Palestinians or Arab Israelis, 52 Israelis and seven foreigners, according to an AFP count.
Israeli authorities say most of the Palestinians killed were carrying out knife, gun or car-ramming attacks. The violence has subsided in recent months.