Witnesses told Ma’an that Israeli soldiers traveling in a civilian car opened fire at a group of people at the entrance to al-Arrub refugee camp south of Bethlehem.
Lubna Munir Hanash, 22, was shot in the head and died from her injuries, medics said.
Suad Yusuf Jaara was shot in the hand and transported to Ahli hospital in Hebron.
Witnesses told Ma’an that after the shooting Israeli soldiers prevented an ambulance from arriving at the scene for around 10 minutes.
Locals said there were no clashes in the area at the time.
An Israeli army spokeswoman said that “soldiers were attacked by Palestinians who hurled multiple firebombs at them while they were traveling near al-Arrub. Soldiers returned fire and the circumstances of the incident are currently being reviewed.”
Israeli soldiers searched the area and found several firebombs ready for use, she said, adding that no soldiers were injured in the incident.
Earlier on Wednesday, Salih al-Amarin, 15, died of his wounds in an Israeli hospital after being shot in the head during clashes with Israeli soldiers in a refugee camp in Bethlehem on Friday.
That incident followed a spate of fatal shootings by Israeli soldiers that killed four Palestinians in a week.
Palestinian Authority Prime Minister Salam Fayyad issued a statement calling for “strong condemnation from the international community” of these shootings, and urged “immediate intervention to compel Israel to desist from these serious attacks on our people.”