The last attack in a West Bank settlement was in April, when a Palestinian tried to stab an Israeli with a screwdriver near a petrol station in an industrial area connected to the Maale Adumim settlement east of Jerusalem.
Israeli army spokesman Jonathan Conricus said that around 8.50PM local time the assailant jumped over the fence that surrounded the settlement and stabbed two passers-by.
The Israeli army says the attacker was shot and killed, reportedly by a civilian who was passing by.
A 17-year-old Palestinian crept into the settlement of Adam on Thursday night and stabbed Yotam Ovadia, 31, to death. The army said Friday it had raided the village, questioned a number of his family members and suspended their work permits.
On July 21, in one of the most intense bouts of fighting since a 2014 war, Israel and Hamas exchanged fire that killed four Palestinians - three of them Hamas militants - and one Israeli soldier.
Hamas' armed wing, the al-Qassam Brigades, said earlier Thursday that Israel "must pay a high price with its blood" making an apparent reference to the three killed Palestinians.
Lone Palestinian attackers have carried out multiple deadly stabbings and car-rammings against Israelis in recent years.
Tensions have spiked since Palestinians began protesting along the Gaza border in late March, with Israeli fire killing at least 153 Palestinians since then.
"In response. artillery targeted seven military posts in Gaza belonging to the Hamas terrorist organisation". Israel says the fate of settlements must be resolved through peace talks.