According to the ministry, two Palestinians were critically hurt by gunfire during Saturday's clashes in Qarawat Bani Hassan, close to Nablus in the northern West Bank.
Mujahed Dawood, 30, passed away from his wounds in a hospital.
In a statement, the Israeli army claimed that "suspects hurled rocks" at soldiers after they used live fire to quell "a violent riot."
More than 100 Palestinians have been killed since the start of the year, the heaviest toll in the West Bank for nearly seven years, according to the United Nations.
Violence has surged amid near-daily West Bank raids by Israeli troops.
Israel has occupied the West Bank since the 1967 Six-Day War.