The teenager killed was Waseem Khalifa, 18, from Balata, the largest refugee camp in the West Bank, medics said.
The Palestine Red Crescent said at least 30 Palestinians were wounded in the incident.
Four people were shot with live ammunition, three of whom were in critical condition, it said.
Witnesses said violence broke out when Israeli forces arrived to protect Jewish worshippers visiting Joseph's Tomb at Balata.
The Israeli military is investigating the incident, Reuters reported.
According to Israeli media, armed Palestinians exchanged fire with Israeli soldiers around the site. No Israeli casualties were reported.
Last week, three Palestinian gunmen were killed in a shoot-out with Israeli forces in Nablus.
This month saw fighting between Israeli forces and the Palestinian militant group Islamic Jihad in Gaza — the worst in more than a year.
In pictures – Israeli security forces raid amid West Bank protests
Israeli jets pounded the Gaza Strip in what the Israeli military said was a pre-emptive attack aimed at preventing an imminent threat.
At least 49 people were killed in Gaza, including civilians and children, and hundreds more were wounded during 56 hours of fighting.
More than 1,000 rockets were launched towards Israel by Islamic Jihad.
Israeli forces have carried out near-daily raids in the West Bank in recent months, after men from the area carried out deadly street attacks in Israel.