Mustafa Tamimi, 28, sustained a head injury during a Friday protest held in the village of Nabi Saleh against an Israeli barrier built across the West Bank. Organizers said he was hit by a tear gas canister fired by Israeli soldiers.
An Israeli military spokeswoman said the demonstrators had "hurled rocks at (Israeli) security forces who responded with riot dispersal means" and that an investigation into the incident was underway.
Tamimi was treated at a hospital in central Israel, where he died early on Saturday, a spokeswoman said.
Stone-throwing clashes have become a weekly occurrence at fixed flashpoints along the route of the West Bank barrier, which Palestinians condemn as a land grab.
Israel started building the network of metal fencing, barbed wire and concrete walls in 2002 following a wave of Palestinian suicide bombings in its cities.