The incident took place during an IDF raid to locate terror suspects affiliated with the al-Aqsa Martyrs Brigades.
Medics reported that the man killed was Anan al-Teibi, 41. Al-Teibi's 24-year-old son Ashraf was wounded in the incident.
A neighbor, Nashaat Hijawi, said al-Teibi was hit by shots fired at the house from a passing Israeli army jeep. The army said it was checking the report.
Earlier, local gunmen fired at a Golani Brigade force operating in Nablus' old quarter, damaging an army jeep. None of the soldiers was injured.
A large-scale IDF force entered the West Bank city Sunday morning in an operation defined as "activity against terror infrastructures."
In the course of Sunday's operation soldiers exposed an explosives lab containing a LAW missile, five pipe bombs, a large explosive device and four sacks of fertilizers used for manufacturing bombs.
Palestinian media outlets reported that IDF forces arrested Monday morning the owner and director of local TV station 'al-Sanabel', 43-year-old Sheikh Nayef Breik, and seized all appliances and transmission devices owned by the station.
Additionally, an-Najah University and the education directorate of Nablus announced the suspension of the study for the second day due to the Israeli incursion.