Three Palestinians were killed by Israeli forces in the Balata refugee camp in the West Bank early on Monday, the Palestinian Health Ministry said.
Another six Palestinians were injured, one of whom was in a critical condition.
Israel's military said the operation was carried out to detain terrorist suspects and three were taken into custody. It said forces destroyed an explosives laboratory and seized weapons.
The deadly raid comes after the Biden administration on Sunday said it was "deeply troubled" over an Israeli order that allows Jewish settlers to establish a permanent presence in a West Bank outpost.
The Israeli military's Central Command chief signed an order on Thursday that allows Israelis to enter the Homesh outpost area, near Nablus, The Times of Israel reported.
It paves the way for a formal settlement to be built there.
“We are deeply troubled by the Israeli government’s order that allows its citizens to establish a permanent presence in the Homesh outpost in the northern West Bank, which according to Israeli law was illegally built on private Palestinian land,” said State Department spokesman Matthew Miller.
The State Department has urged Israel to avoid actions – including formalising settler outposts – that could escalate tensions with Palestinians.
It has in the past warned Israel against outposts in Homesh.
The order is inconsistent with Israeli government commitments made in 2004 and more recently to officials in President Joe Biden's administration, Mr Miller said.
In the same statement, Mr Miller criticised Israeli National Security Minister Itamar Ben-Gvir's "provocative" visit to Al Aqsa Mosque compound on Sunday.
It is the world's third holiest site for Muslims.
Mr Ben-Gvir said Israel was “in charge” of the compound, which the US said was "inflammatory rhetoric".
The Jordanian Waqf maintains authority over Al Aqsa under a long-term arrangement endorsed by Israel for decades.
The State Department said: "This holy space should not be used for political purposes and we call on all parties to respect its sanctity.”
Jordan, along with a number of other Arab states, on Sunday condemned a meeting of the Israeli cabinet in a tunnel dug near Al Aqsa compound.
Amman said the move set a “dangerous precedent”.
Tensions over new settlements in the West Bank come as Israeli authorities also permitted the expansion of an Israeli neighbourhood in a Palestinian area that borders East Jerusalem and the West Bank.
The proposals are now subject to further planning stages.
The developments come after months of escalating violence between Israelis and Palestinians that have concerned the US and a number of other countries.
On Thursday, mostly far-right Israeli nationalists held a flag march that started at Damascus Gate, the main entrance to the Muslim Quarter of Jerusalem's Old City.
The route took marchers through the quarter and past Al Aqsa Mosque.
Many demonstrators chanted racist slogans, including "death to Arabs" and "may your villages burn".
At least two Palestinians were injured throughout the course of the day.
Despite calls from Palestinians, many Israelis and the international community, Prime Minister Benjamin Netanyahu allowed the procession to stick to its original route, through areas of Jerusalem populated by Palestinians.
Agencies contributed to this report
