Police spokeswoman Luba Samri said the suspected arson attack took place early today in the West Bank village of Duma.
Palestinian officials said attackers broke Ibrahim Dawabsheh's bedroom window and set the house on fire.
Dawabsheh is a relative of last year's victims and a key witness to the attack. He is testifying before an Israeli court in the suspected perpetrators' trial. He was unharmed but his wife suffered from smoke inhalation.
Last July, suspected Jewish settlers hurled firebombs into a home, killing 18-month-old Ali Dawabsheh. His mother, Riham, and father, Saad, later died of their wounds. Ali's 4-year-old brother Ahmad survived.