According to the ministry, Amjad Abu Alia was shot in the chest by a live bullet and pronounced dead after he was brought to the hospital. He was shot as some 250 Palestinians gathered to protest against Israeli settlement expansion in the village of Mughayer, north of the city of Ramallah.
There was no immediate statement from the Israeli military.
The protesters closed a road used by settlers with burning tires, after which scuffles erupted with the settlers, according to an Associated Press reporter at the scene. The Israeli military stepped in, firing stun grenades and tear gas to disperse the protesters.
Shortly after, both settlers and soldiers fired live shots, according to Wafa, the official Palestinian news agency.
Abu Alia was shot as he was running away with a group of protesters. The ministry said five protesters were wounded; three by live fire and two by rubber-coated bullets.
Demonstrations against Israeli settlement expansions are a weekly occurrence in several parts of the West Bank, which Israel occupied in the 1967 Mideast war.
The Palestinians want the West Bank and the Gaza Strip for a future state, along with a capital in east Jerusalem. They say the building of settlements, which house half a million settlers, hinders an independent, contiguous Palestinian state in the future.
Most of the international community does not recognize settlements and considers them illegal.