A large crowd of settlers stormed the town, south of Nablus, on Sunday morning, the official Wafa news agency reported, with local mosques broadcasting appeals for residents to "repel" the group.
Israeli forces blocked all entrances to the town, Wafa added, and closed all roads leading to several nearby towns and villages, including Huwara, where schools have been closed in fear of settler attacks.
Two Israeli settlers were killed in a shooting at a car wash near the flashpoint town on Saturday, the latest in a spiral of violence which has made 2023 the deadliest year for Palestinians in two decades.
Schools in Huwara were closed on Sunday as the Israeli army looked for the suspected Palestinian gunman in Saturday's attack.
Nablus's acting governor Ghassan Daghlas ordered the closure of Huwara's schools "after requests from parents who are afraid of reactions from settlers", he told AFP.
The town has suffered several settler attacks following Palestinian attacks on Israelis.
Israeli army officials – both retired and serving – have condemned the settler violence, which has also exposed rifts between Israel's ultra right-wing government and its security institutions.
Hundreds of settlers stormed the village in February after two Israeli brothers were shot dead in the town.
Cars, homes and businesses were set alight in the attack, which killed one and left several wounded.
"Whenever an attack occurs that negatively affects the residents of Huwara … settlers break in, hurl rocks and smash cars," resident Ashraf Odeh told AFP.
"The army can do nothing for you because its priority is to protect the settlers before it protects us."
At least 218 Palestinians have been killed in violence linked to the Israeli-Palestinian conflict this year.
About 30 Israelis, one Ukrainian and one Italian have also been killed, according to an AFP tally compiled from official sources on both sides.
Nablus and Jenin have borne the brunt of almost-daily Israeli army raids, which Israel says target suspected militants responsible for or plotting to carry out attacks on Israelis.
Civilians, including children and the elderly, are regularly killed, however.
Israel has occupied the West Bank since 1967.
Excluding annexed East Jerusalem, the territory is home to nearly three million Palestinians and about 490,000 Israelis who live in settlements considered illegal under international law.