"One terrorist was shot dead," police said in a statement. A police spokesman said a second gunman had taken part in the attack and was moderately wounded by Israeli forces.
One of the gunmen had a rifle and the other was armed with a pistol, police said.
Medical officials said six people were rushed to hospital, two of them in serious condition, two moderate, and two lightly wounded.
The shooting was the latest in a series of attacks by Palestinians targeting civilians and security forces in Israel and the West Bank in a wave of violence and unrest raising fears of a full-scale Palestinian uprising.
Including alleged assailants, 42 Palestinians have been killed since an upsurge in violence began on October 1, while seven Israelis have lost their lives.
Get Breaking news, live coverage, and Latest News from India and around the world on NDTV.com. Catch all the Live TV action on NDTV 24x7 and NDTV India. Like us on Facebook or follow us on Twitter and Instagram for latest news and live news updates.