A relative identified the teen as 14-year-old Orwah Hammad and said he was born in New Orleans and came to the West Bank at age six. Hammad's cousin Moath said he was among a group of Palestinians who were throwing rocks at Israeli soldiers.
A US State Department official yesterday confirmed that the teenager was an American citizen. The official spoke on condition of anonymity because he was not authorised to speak publicly about the case.
Hammad is the second teen to be killed by army fire in eight days. A 13-year-old was killed last week in a West Bank village.
The Israeli military said soldiers "prevented an attack" by opening fire on a Palestinian who was throwing fire-bombs at traffic on a highway yesterday evening.
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Tensions have been high since June, when three Israeli teenagers were kidnapped and killed by Palestinian militants in the West Bank. Jewish extremists retaliated by kidnapping and killing a Palestinian teenager in east Jerusalem, sparking riots. The kidnappings set off a series of events that led to the 50-day Gaza war.
The car's driver, identified as Abdel Rahman al-Shaludi, was a Palestinian from east Jerusalem who had served time in prison for militant activities. He was shot by police as he tried to run away and later died from his wounds.
The last few months have also seen clashes at Jerusalem's most sensitive holy site between Palestinian stone throwers and Israeli police, adding to the tensions.