The soldier "thwarted this attack after he identified a terrorist attempting to stab civilians and an IDF (Israel Defence Forces) officer," the army said of the incident at Elias junction near Hebron and the settlement of Kiryat Arba.
In response, the soldier fired towards the terrorist and neutralised him.
A military spokeswoman told AFP the alleged assailant was a Palestinian, who appeared to be slightly wounded in video footage taken after the incident.
A wave of mainly lone-wolf Palestinian attacks against Israelis broke out in 2015.
The number of attacks has decreased since, but there are fears of another upsurge in violence.
On October 22, a Palestinian was shot dead when attempting to stab soldiers in Hebron.
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