After the incident at the Dheisheh refugee camp, clashes also broke out at Aida, another camp in Bethlehem, the official Palestinian news agency Wafa reported.
The person killed was identified as Malek Shahin, but the reason for the raid was not yet clear.
According to the Israeli army, soldiers entering Dheisheh were targeted with pipebombs and molotov cocktails.
"Forces fired warning shots into the air in order to disperse the mob and prevent an escalation of violence," a military spokeswoman said.
Since October 1, almost daily attacks and clashes between Palestinians and Israeli soldiers have killed 112 on the Palestinian side, 17 Israelis, an American and an Eritrean.
Many of the Palestinians killed have been attackers, while others have been shot dead by Israeli security forces during clashes.
