A Palestinian man was killed by Israeli forces in a refugee camp in the West Bank city of Jenin in what the army called its latest "counterterrorism" raid.
Troops used "live ammunition" after the army said they were targeted with gunfire and explosives by Palestinian "rioters", AFP reported.
It follows a series of attacks that have taken place in Israel in the past month.
The Palestinian health ministry identified the man killed as Ahmad Massad, 18, from Burqin village in the north of the occupied West Bank.
He was shot in the head, a hospital official told the official Palestinian news agency Wafa.
The army said 12 people were arrested in the overnight raids at several West Bank locations. The Palestinian Prisoner's Club group put the number of arrests at 17.
More than a thousand people gathered for Mr Massad's funeral in Burqin.
Masked gunmen fired volleys into the air as his body was taken from his family home, said AFP. The report said a band with the logo of the Palestinian armed movement Islamic Jihad was wrapped around his forehead.
Israeli security forces have stepped up operations in recent weeks in the West Bank, particularly around Jenin, where there are active fighters from several Palestinian armed groups.
During the overnight operation, the army said it also delivered a demolition notice to Hazem's family home.
The destruction of assailants' homes is a common Israeli practice and condemned by critics as an illegal form of collective punishment.
The Tel Aviv shooter's father Fathi Hazem and brother Hamam are both wanted by Israel.
Hours after the demolition notice was handed over, the father appeared in a video that was then circulated widely in Palestinian media.
He accused Israel of labelling all Palestinian youths as "terrorists" and told a small crowd, speaking at an unknown location, that "we will defeat them, God willing, and soon".
Hamam Hazem told AFP earlier this month the family had no prior knowledge of Raad's plans for the Tel Aviv attack.
Clashes between Israeli forces and Palestinians are common in the West Bank, a territory occupied by Israel since 1967.
Violence has intensified in the territory and in Israel as Ramadan and the Jewish holiday of Passover overlapped this month.
The mounting violence since March 22 has killed 12 Israelis, including an Arab-Israeli police officer, and two Ukrainians in four separate attacks inside Israel.
A total of 26 Palestinians and three Israeli Arabs have died during the same period, among them the perpetrators of the attacks and those killed by Israeli security forces in West Bank operations.
Massad's death follows that of another Palestinian killed on Tuesday when Israeli forces stormed a West Bank refugee camp near Jericho.
Violent clashes have also rocked the Al Aqsa Mosque compound in East Jerusalem, sparking fears of another conflict after last year's 11-day war between Israel and armed groups in the Gaza Strip.