The attack happened late Friday near the illegal Ofra settlement, northeast of the city of Ramallah, Israeli army said in a statement, AFP reproted.
The Palestinian man had reportedly attempted to run over soldiers with his car, prompting them to open fire, it added. He then got out of the vehicle brandishing a knife and troops fired again, seriously wounding him, the statement said.
The occupied Palestinian territories have witnessed new tensions ever since Israeli forces imposed restrictions on the entry of Palestinian worshipers into the al-Aqsa Mosque compound in East Jerusalem (al-Quds) in August 2015.
More than 240 Palestinians have lost their lives at the hands of Israeli forces in the tensions since the beginning of last October.