The victims of the drive-by shooting attack, named as David Rubin and Ahikam Amihai, were hiking in the area of the West Bank settlements of Talam and Adura with a female resident of Kiryat Arba when a group of four Palestinian terrorists opened fire on them from a Jeep.
Rubin and Amihai, who were soldiers on leave from the Israel Defense Forces, managed to return fire and reportedly killed one of the terrorists.
They later died from their wounds, while the woman who accompanied them managed to hide and was not harmed.
Palestinian sources stated Friday that IDF troops raided a hospital in Hebron searching for a gunman believed to have been wounded in the attack. The IDF has not confirmed the report.
Israel sent a letter of protest over the attack to UN Secretary General Ban Ki-moon and to the president of the Security Council, Israel Radio reported Saturday.
Both Islamic Jihad and the armed wing of Fatah claimed responsibility for the shooting. Israel has recently killed several of Islamic Jihad's militants in the Gaza Strip, including some senior commanders.
Israeli envoy to the United Nations Dan Gillerman emphasized that the Palestinian Authority has still not proven its desire to fight terror, and that Islamic Jihad receives finance and cover from UN member states.
Both Rubin and Amihai were in elite units of the IDF, with Rubin serving as a sergeant in the Israeli Naval commandos and Amihai as a corporal in the Israel Air Force's equivalent unit.
The terrorists then escaped and the woman called the emergency center in Kiryat Arba. However, the rescue team had trouble locating her because she did not know their whereabouts.
Israel Defense Forces and paramedics were called in to help with the search, and managed to reach the bodies of the two men. The woman, who suffered from shock, was taken to a Kiryat Arba clinic nearby.
The group had threatened to retaliate for the Gaza attacks, saying the Israeli actions would "not go unpunished".
An Israel police spokesman called Friday's shooting a "terrorist attack" and said police and the army had searched the area for the attackers.
The shooting attack came hours after IDF troops killed a bodyguard of the Palestinian Authority's chief negotiatator, Ahmed Qureia,in Ramallah.
Also Friday, Palestinian militants in the Gaza Strip fired a Qassam rocket at the western Negev. No injuries or damages were reported.
Amihai and Reuben will be laid to rest on Saturday evening. Their funeral procession is set to pass from Kiryat Arba to the military cemetery of Mount Herzl in Jerusalem.
Rubin is the son of Rabbi Mishael Rubin of Hebron and his brother is the acting rabbi of "Shavei Hebron" yeshiva in Beit Romano.
Amihai, who served in the elite Shayetet 13 Naval commandos unit, is the son of Rabbi Yehuda Amihai, head of the Land and Torah center that was formerly based in Kfar Darom in Gush Katif and was moved to Ashkelon after the disengagement in 2005.
Ahikam's mother Esther is the daughter of Rabbi Moshe Tzvi Nariya, known to many as "the father of the kippot srugot," referring to the knit skullcaps popular with the settler movement.
The Kiryat Arba council severely criticized the government following the attack. Zvi Katzover, head of the local council, said in response that "whoever lets off terrorists and supplies them with guns does not have to push the trigger in order to become an accomplice."
MK Uri Ariel (National Union-National Religious Party) added that the murder is "further proof of intensified terrorist attacks by Arabs, who take advantage of Israel's weakness and lenience." He stressed that the prime minister's recent declarations regarding the release of Palestinian prisoners and the freezing of building permits in East Jerusalem and the West Bank, were a "tail wind for terrorism."
The Almagor Terror Victims Association requested this week that the cabinet cancel its planned discussion on the easing of criteria for the release of prisoners. Instead, the association said in response to the murder that the cabinet should schedule a security discussion on replacing removed roadblocks and restrictions for Palestinian vehicles on central routes.
The chairman of the association, Meir Indor, said that the proposed discussion would "send out a clear message to the terrorist organizations that renewing terrorist attacks comes with a heavy price: in refusing to release prisoners and in hardening Israel's line regarding the Palestinians."
Last month, an Israeli resident of the Shavei Shomron community in the West Bank was shot and killed while driving to a nearby settlement by three Palestinians, members of the PA's security force.
The Fatah-affiliated Al-Aqsa Martyrs' Brigade took responsibility for that attack. A statement from the group said the shooting came in protest of the upcoming Annapolis peace summit and the "crimes of Israel against the Palestinians."
In a separate incident on Friday, a number of casualties were reported in clashes between Palestinian clans in the same area.