Israel's military has blocked all entry and exit points to the Palestinian city of Ramallah after two Israelis were killed in an attack in the West Bank.
The army said the shooting at a bus stop near the Ofra settlement also wounded at least two other people, although a spokesperson was unable to confirm reports the assailant targeted Israeli soldiers.
It came hours after Israeli forces killed two Palestinians in the West Bank.
While the West Bank experiences occasional deadly violence, often between Israeli troops and Palestinian protesters, much of the Israeli-Palestinian bloodshed in recent months has been limited to the Gaza Strip, where some 175 Palestinians have been killed by Israeli fire in border protests.
Israeli forces said Naalwa was killed as they tried to arrest him near the West Bank city of Nablus.
The shooting comes hours after Israeli security forces tracked down and killed a Palestinian accused of killing two Israelis.
Little Amiad Israel passed away from his multiple wounds earlier in the day, just three days after his mother was shot multiple times Sunday in a vicious terrorist attack outside the Jewish community of Ofra.
Eli Bin, head of Israel's Magen David Adom service, told Israeli Army Radio that two people were killed in the shooting at a location about a 10-minute drive south from where Sunday's attack occurred.
"It is a part of the new initiative of (Hamas) that made a decision to open a new front in the West Bank after a period of time that they got to the conclusion they will ease down their efforts from the Gaza Strip", Barak Ben-Zur said. The IDF believes that the attacker then fled the scene by auto, driving somewhere near Ramallah.
A 21-year-old Border Policeman was lightly hurt and was taken to the Shaare Zedek Medical Center in the capital.
The West Bank has seen simmering violence over long-stalled Israeli-Palestinian peace talks. He then fled the scene and his vehicle was located by security forces near Ramallah.
Conricus declined to comment on whether there was a connection between Thursday's shooting and the attack earlier this week, but he said the army was "investigating such theories", and responding to the current "environment of incitement" in the West Bank.
Israel accuses Naalweh of shooting to death two Israelis and wounding another at an attack in a West Bank industrial zone in October.
"The security forces are in pursuit of the murderer".
Israeli human rights organisation B'Tselem released security camera footage that it said proved Israeli forces were not under threat when they shot and killed Ihbali, who was mentally challenged. It said an unspecified number of other suspects were arrested.
Hamas has said that both men were members.
The male officer was stabbed in the face, near his eye.