The militant, who has been on the defense establishment's wanted list, was killed in an exchange of fire that erupted during an arrest operation in the area.
Troops surrounded a house in the village of Saida and demanded that its
occupants come out, according to resident Abdel Karim Hammad, whose family lives in the house.
Saleh Karkur, 27, a wanted Islamic Jihad gunman who was staying with the family, refused to come out, a gunfight erupted, and Karkur was shot and killed, Hammad said.
The Israelis then demolished half of the house and arrested Hammad's father for harboring a wanted militant, he said.
Palestinian medics said they took the man's body from the scene.
The IDF confirmed an operation in the village but would not
immediately provide details.
Explosives and weapons were found on the militant's body at the end of the battle, according to Israel Radio. There were no injuries among the soldiers.
Hamas official Sami Abu Zuhri said Israel's raids in the West Bank showed "it was not interested in calm". Hamas, he said, would hold Israel responsible for the consequences.
Reservists fire at Israeli Arab car thief
Meanwhile, IDF reserves soldiers Wednesday morning opened fire on an Israeli Arab man driving a stolen car in the Yatir Forest south of Hebron.
The reservists said they had ordered the man to stop, at which point he sped up, prompting troops to open fire.
The driver was lightly wounded and taken for medical treatment.