The fresh attack could further fuel Israeli-Palestinian tensions that have soared in the past two months.
The Israeli military said the attackers arrived at Ariel settlement entrance late on Friday and shot the guard in his post before fleeing the scene.Â
The military launched a pursuit of the suspects in the West Bank.
A string of Palestinian attacks in Israel and the West Bank in the past two months have left 14 Israelis dead.
Hamas, the militant group ruling Gaza, praised the attack but stopped short of claiming responsibility for it.
"The operation proves that revolution is raging all over the West Bank," spokesman Hazem Qassem said.
Tensions increased this month at a major Jerusalem holy site, with Palestinian worshippers clashing daily with Israeli police.
The site contains Al-Aqsa Mosque, the third-holiest site in Islam, and increasing numbers of Palestinians go there to pray during the Muslim holy month of Ramadan.
Earlier on Friday, Palestinians hurled stones and Israeli police fired rubber-coated bullets at the site, which has seen a wave of unrest in recent weeks.
The police say Palestinians inside the mosque compound began hurling stones and fireworks about dawn in the direction of a heavily guarded gate that leads to the Western Wall.
The police advanced into the compound, firing rubber-coated bullets.
The violence ended about an hour later after other Palestinians in the compound convinced the stone throwers and the police to pull back.
Police said they arrested three people. The Palestinian Red Crescent said more than 40 people were wounded.
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