"Yahya Taha, 21, from the village of Qatanna... Died after he was shot and wounded in the head during clashes," a ministry statement said, referring to an area northwest of Jerusalem.
The death brings to 95 the number of Palestinians killed in violence since October 1, including an Arab Israeli.
Around half of them have been the alleged perpetrators of a wave of stabbing, shooting and car ramming attacks. Others have died in clashes with security forces.
The violence has also left 17 Israelis, an American and an Eritrean dead.
Attempts to ease the tensions, including a visit by US Secretary of State John Kerry on Tuesday, have so far proved unsuccessful.
Palestinian Islamist group Hamas, which controls the Gaza Strip, has called a day of anger for Friday.