An Israeli was killed and two others wounded in a shooting near the southern West Bank city of Hebron on Monday, the army said.
The incident at the start of the Jewish Passover holiday was the first deadly attack on an Israeli in the occupied West Bank since the start of the year, and came as tensions were soaring over the near-breakdown of US-brokered peace talks.
"Fire was opened at Israeli civilian vehicles on Route 35, near Hebron, and we're conducting widespread searches for the perpetrators... An Israeli civilian was killed in the attack," a spokeswoman told AFP.
A separate army statement said two other Israelis were wounded.
The man who was killed was a police officer from the town of Modiin in central Israel, an Israeli security source told AFP on condition of anonymity.
The policeman's wife and nine-year-old child were wounded and transferred to hospital. Three other children were in the vehicle, according to Israeli military radio.
Israelis in another car said they saw a man wearing a helmet and firing a Kalashnikov assault rifle on the side of the road, it said.
Dozens of army vehicles fanned out into nearby Palestinian villages, and a security barrier was erected at the main entrance to Hebron, the largest city in the West Bank, according to an AFP photographer.
The flashpoint city of Hebron is home to nearly 200,000 Palestinians. There are some 80 settler homes in the centre of town housing about 700 Jews who live under Israeli army protection.
The Palestinian Hamas movement ruling Gaza, and fellow Islamist movement Islamic Jihad praised the attack, linking it to recent unrest in the flashpoint Al-Aqsa compound in Jerusalem's Old City.
"Hamas praises the heroic Hebron operation and considers it a result of the (Israeli) occupation's oppression and crimes against our people and holy places, including the Al-Aqsa mosque," a statement said.
Islamic Jihad released a similar statement, hailing the attack and linking it to "settlers appropriating the blessed Al-Aqsa mosque."
But neither group claimed responsibility for the attack.
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-- Clashes in Jerusalem --
On Sunday, Israeli police arrested five people after Palestinians clashed with security forces at the Al-Aqsa mosque compound.
Police said "stones and Molotov cocktails" were thrown at officers, who responded using stun grenades and entered the compound.
An AFP journalist said Hamas members were among the protesters.
The compound, in the walled Old City, houses the Dome of the Rock and Al-Aqsa mosques, and is the third most sacred site in Islam.
It is also the holiest place in Judaism, venerated as the site where King Herod's temple stood before it was destroyed by the Romans in 70 AD.
Clashes frequently break out there between Palestinians and Israeli security forces.
Muslims are intensely sensitive to any perceived threat to the status of the compound and many believe Jews are determined to build a new temple on the wide esplanade.
Jews are not allowed to pray on the Temple Mount, but often try to enter the compound.
Monday's shooting took place as the seven-day Jewish Passover holiday began.
In September, an Israeli soldier was shot dead by a suspected Palestinian gunman in the centre of Hebron during the week-long Jewish holiday of Sukkot.
Nine Palestinians have been killed by Israeli forces since January 1 in the West Bank, where around 350,000 Israelis live in settlements considered illegal by the international community.
Israeli and Palestinian negotiators have meanwhile been trying to save collapsing US-backed peace talks, and were scheduled to meet again Wednesday with US envoy Martin Indyk.