The ministry said 17-year-old Jibril Mohammed Kamal al-Ladaa died after being “shot in the head” in the Aqabat Jabr refugee camp near the city of Jericho.
Six others were wounded, including three in serious condition, Palestinian health officials said.
Israel’s military said “armed suspects fired at the soldiers, who responded with live fire”.
No soldiers were wounded in the incursion, the army said, while three people were detained by Israeli forces.
The latest deadly raid brings to 101 the number of Palestinians killed in the Israeli-Palestinian conflict so far this year.
Nineteen Israelis, one Ukrainian and one Italian have been killed over the same period, according to an AFP count based on official sources from the two sides.
These figures include combatants as well as civilians, and, on the Israeli side, include three members of the Arab minority.
AFP