Two other people were injured in the attack, one of whom was in critical condition, according to reports.
The assault occurred at a military observation post near Mevo Dotan, an Israeli settlement in the West Bank.
Two Israeli soldiers have been killed with at least two more injured after a Palestinian man deliberately drove into them in a vehicle ramming attack in the West Bank.
Israel's security service identified the suspect as Alaa Kabha from a village near Jenin. Protests of the US recognition have taken place weekly since it was made in December.
Last week, a bomb was detonated during the visit of Palestinian Prime Minister Rami Hamdallah sparking a public row between Hamas and the Palestinian Presidency who held Hamas responsible for the attacks.
Since Trump's recognition, Friday protests have become commonplace, with multiple Palestinian protestors killed in clashes with Israeli security forces. Palestinians have been under Israeli occupation nearly 70 years, facing humiliation and human rights abuses every day. The events come ahead of what could be a tense few months, with a number of significant dates that may spark tension.
Palestinian leaders have boycotted Trump's administration over the declaration, though the White House says it still plans to push ahead with its efforts to restart peace talks. In addition, several tunnels located inside the coastal enclave have also been targeted using a newly developed system that allows Israel to hit them from the air.
Israeli warplanes early Sunday carried out a series of airstrikes on Palestinian agricultural lands east of Al-Zaytoun neighborhood in Gaza.
Israeli military authorities in the West Bank swiftly announced the "immediate and broad suspension" of all permits for the family of the Palestinian driver.