Some local residents described the man slain at the entrance to Beita village near the city of Nablus as a 41-year-old plumber who was heading home from work when he was shot dead.
There were no disturbances there at the time, the locals said.
An Israeli military spokeswoman said the Palestinian, carrying an iron bar, had "advanced rapidly" toward troops despite them firing warning shots in the air.
"When the suspect continued advancing, the commander fired toward the suspect," she said, adding that the incident would be investigated.
The West Bank is among territories where Palestinians seek statehood. Violence has simmered there since US-sponsored talks between the Palestinians and Israel broke down in 2014.