The elite Duvdevan unit found two rifles, magazines and bulletproof vests in his home.
The IDF reported that Palestinians opened fire at the soldiers, who fired back. Several hours later, Kaabeh was killed and his deputy was arrested.
The Palestinians reported that another person had been detained and that exchanges of fire had left great damage in the area.
Kaabeh and the two operative who were with him were considered by the Palestinian Authority part of the rebellious group of the al-Aqsa Brigades. They refused to accept the amnesty deal signed with Israel, which compelled them to renounce terror and hand in their weapons.
PA officials have accused Kaabeh of attempting to assassinate Nablus' governor last week as the latter visited the refugee camp. Following the incident, exchanges of fire erupted between Kaabeh and his men and members of the Palestinian security forces.
On Thursday, Zakaria Zubeidi, one of the al-Aqsa Brigades commanders in Jenin, accused the PA of groveling and being sycophant to Israel, after arresting a group member who was on the list of wanted men who signed the agreement with Israel.
Also Thursday, an IDF force operating in the town of Qabatiya near Jenin killed two members of the al-Quds Brigades, the Islamic Jihad's military wing.
IDF forces reportedly entered the town early Thursday and proceeded to encircle the house in which the two gunmen were hiding. A gunfight soon erupted, resulting in the two's death. They were later identified as Izz al-Din al-Sahu and Bilal al-Tarijal.
Efrat Weiss contributed to this report