IDF soldiers shot a Palestinian man dead and lightly wounded a second after the pair threw firebombs at homes in Beit-El, north of Ramallah, on Friday evening.
Palestinian sources said the casualty was a 16-year-old youth.
Soldiers guarding the settlement arrived on the scene after homes in the northern part of Beit El were targeted by the Molotov cocktails. They called on the suspects to halt the attack, and opened fire after their calls went unheeded.
The wounded Palestinian was taken to a Ramallah hospital for treatment.
The incident was the second attack on a settlement within a day. On Friday morning, a Palestinian armed with a knife was shot dead by civilian guards after a struggle in the settlement of Beit Hagai, south of Hebron.
The terrorist had infiltrated the settlement and had begun wandering around the area, drawing the suspicions of two resident civilian guards.
The men pulled up un their vehicle alongside the suspect, and asked him a question to ascertain his intentions.
"He immediately pulled out a knife," one of the civilian guards told Army Radio. "We got out of the car and my friend began fighting with him."
The attacker managed to stab the guard in the leg during the fight, lightly wounding him.
"I tried to fire my gun but it jammed. My friend then took the gun and opened fire," the guard said.
Security forces launched a search of the area following the attack to check for additional attackers; none were found.
Yair Levy, spokesman for Beit Hagai, described the foiling of the attack as a "miracle."
In another incident on Saturday, traffic police officers were injured when a Palestinian taxi driver rammed his vehicle into them at a checkpoint north of Jerusalem.
The incident began at approximately 10 a.m. at the Hizma checkpoint, when a 37-year-old Palestinian driver from Azariya, on the outskirts of the Jerusalem, struck the two officers with his Mercedes.
A 40-year-old police officer was moderately injured and a 24-year-old officer was lightly hurt in the attack. They were taken to Hadassah-University Hospital at Ein Kerem.
During an initial interrogation, the suspect confessed to deliberately striking the officers, Judea and Samaria Police said.
He was then transferred to Binyamin Police for further questioning, and told officers he suffered from a mental illness.
Police said the "true nature of the incident" had yet to be verified, adding that the Shin Bet (Israel Security Agency) would also question the suspect.
Police are seeking to understand whether the attack was part of a recent wave of "improvised" spontaneous attacks by lone terrorists. On Saturday, Hamas praised the attack, saying it was a natural response to the Israeli 'occupation.'
