The incident took place on Monday after a 21-year-old Palestinian named as Abed al-Mhasan allegedly drove his vehicle into Israeli settlers standing at the bus stop at the western entrance of the city.
Some eight Israeli settlers were injured in the incident.
Israeli police said the Palestinian was shot dead at the scene by Israeli forces.
Tensions in the occupied territories have dramatically escalated since the Israeli regime’s imposition of restrictions in August on the entry of Palestinian worshipers to the al-Aqsa Mosque compound in East al-Quds.
Palestinians are angry at increasing violence by Israeli settlers at the al-Aqsa Mosque compound and their attacks on Palestinian properties, saying that the Tel Aviv regime seeks to change the status quo of the compound.
More than 120 Palestinians have been killed in the recent escalation of violence since the start of October. Nearly 20 Israelis have also been killed in the clashes.
According to the Palestinian Prisoners’ Society (PPS), 85 percent of Palestinians who were killed by Israeli troops since the beginning of violence were “extra-judicially executed.”
PPS said Israeli troops have resorted to “direct shooting and killing” instead of detaining Palestinians who are suspected of carrying out attacks on Israeli targets. It said most of the fatalities did not even pose a threat to the troopers' life.
On Sunday, Israeli forces killed a 16-year-old Palestinian girl for allegedly trying to attack an Israeli settler near Kiryat Arba settlement in the occupied West Bank.
A day earlier, some 20 Palestinians also sustained gunshot wounds on Saturday during fresh clashes in the central city of al-Bireh in the occupied West Bank. Locals said university students had organized a peaceful march at the northern entrance of al-Bireh, but violence erupted when Israeli troops approached the demonstrators and opened fire on them.