The drive-by shooting comes after Jewish settlers killed a Palestinian during a rampage through villages in the West Bank.
Israeli officials said the Palestinian attackers had carried out several drive-by shootings on a highway near Jericho, one of which killed the Israeli-American on Monday, before getting away.
The United States confirmed that the man killed was a US citizen, but did not identify him.
The incident occurred after Jewish settlers rampaged through Huwara and other Palestinian villages near Nablus in the West Bank, killing one Palestinian civilian, and burning dozens of cars and homes in what has been described by some Palestinians as a “pogrom”.
Israel had reinforced its West Bank bases after two brothers from a Jewish settlement were shot dead on Sunday, but have been accused of standing by as the Jewish settlers attacked Palestinian villages.
With the Muslim holy month of Ramadan and the Jewish Passover festival weeks away, foreign mediators have sought to tamp down tensions that surged after Israeli Prime Minister Benjamin Netanyahu regained power at the head of a hard-right coalition.
The events cast doubt on Netanyahu’s ability to walk a diplomatic tightrope between Washington – pushing for a lasting compromise – and his own cabinet that includes hardline settlers demanding tough action against Palestinian attacks.
At a regular briefing for reporters, State Department spokesperson Ned Price condemned attacks by both sides and welcomed statements by Netanyahu calling for a cessation of what he described as “vigilante violence” by settlers.
“We expect the Israeli government to ensure full accountability and legal prosecution of those responsible for these attacks, in addition to compensation for the lost homes and property,” Price said.
On Sunday, Jordan, with US envoys, hosted a rare meeting between Israeli and Palestinian officials. The Jordanian foreign ministry said Israel had pledged a slowdown in Jewish settlement announcements and reaffirmed past peace accords.
However, Netanyahu was quick to deny that, and tweeted that there would not be any settlement freeze.