Palestinian radio said Hani al-Kaabi was killed at the Balata refugee camp near Nablus in an exchange of fire.
Al-Kaabi escaped from a Palestinian prison earlier this year and was wanted by Israel for conducting and planning attacks. He was also said to have been behind a failed plot to poison food in a restaurant near Tel Aviv.
The plot came to light when two Palestinians were arrested in Israel and admitted the plot. They alleged the poison was to be supplied by the Al Aqsa Martyrs Brigades, an armed wing of the Fatah faction led by Palestinian President Mahmoud Abbas.
On Thursday, Israeli military strikes killed at least 20 Palestinians, most of whom were civilians, in a new surge of violence in Gaza, and three Israeli servicemen were killed in a Hamas ambush.
