Israeli troops shot dead a Palestinian gunman affiliated with Palestinian Authority President Mahmoud Abbas's Fatah Party in a raid early Wednesday, members of the armed group said.
The shooting also wounded a senior operative of the Aksa Martyrs' Brigades, the group said.
The wounded man, Sufian Kandeel, had recently signed a deal granting him amnesty from Israel, but had not fulfilled several conditions, as group spokesman Mahdi Abu Ghazaleh admitted.
Witnesses said the soldiers entered Nablus's Old City, known as a militant stronghold, disguised in Palestinian security forces uniforms and carrying Kalashnikov rifles typical of the forces.
They spoke Arabic to passers-by, asking "how are you," and raising no suspicions as they took positions on rooftops, the witnesses said.
Security sources confirmed Wednesday that forces operating in Nablus had killed Amar el Anabusi, and wounded Kandeel.
They would not confirm that the unit had disguised themselves as members of the Palestinian security force.
Israel offered the amnesty this summer to about 200 West Bank gunmen, mostly from Fatah, as part of an effort to bolster Abbas in his rivalry with Hamas.
Under the deal, the militants agreed to sit in a Palestinian jail for three months and surrender their weapons. Kandeel had agreed not to harm Israelis, but did not accept the other conditions, said Abu Ghazaleh, who also signed the amnesty deal.
"We signed the list but will not go along with the Israeli conditions... We will not sit in jail and not give in our weapons, because they are valuable to us,'" Abu Ghazaleh said. "We don't believe the Israeli government and all that they say."
Members of the group had said earlier that the two men were armed, but Abu Ghazaleh, who was at the scene of the shooting, said later that they were not.
In other operation Wednesday, IDF and GSS cooperated to capture a leading Hamas operative in Bethlehem, Adel Issa Muhammad Jarish, along with other suspects. The IDF was also active hunting terrorists in Kalkilya.
Also Wednesday, the army reported that it had captured two Gazan terrorists who were associated with an August attempted attack on Israeli troops at the Erez crossing which slightly wounded two soldiers.
The two terrorists admitted spending an entire year planning the attack and that they had spent months scouting the border patrols in preparation.