The Israeli army says the man tried to stab a policeman with a knife before they opened fire.
Palestinian officials said on Thursday that the man had been shot dead, without elaborating on the circumstances.
A video circulated on social media showed a soldier firing at a Palestinian multiple times, even after he had fallen to the ground.
Reuters could not confirm the authenticity of the video.
An Israeli military statement said the Palestinian was driving but deviated from his lane and attempted to ram into civilians and security personnel who were standing at the junction. The individual then exited the car and attempted to stab a police officer, the military statement said.
The Israeli military said the man was carrying a knife, and security forces opened fire and “neutralised” him. The Palestinian Health Ministry said the man had been shot dead by the Israeli military.
The Palestinian National Liberation Movement confirmed that the Palestinian killed, Ahmed Yaqoub Taha, was a Palestinian security officer. No other casualties were reported.
Israeli-Palestinian violence has surged this year, with frequent military raids and violence by Israeli settlers amid a spate of Palestinian attacks. More than 90 Palestinians and at least 19 Israelis and foreigners have been killed since January.
Israel captured the West Bank and East Jerusalem, which Palestinians want as the core of a future independent state, during the 1967 Middle East war. It has since annexed East Jerusalem in a move not recognised internationally.