Dozens of Palestinians from the village of Bilin in the West Bank set up an outpost on land they say was expropriated from them by Israel to expand a Jewish settlement in the area.
Accompanied by women and children, activists crossed the security border and built what they said was a makeshift center for child education.
Mohammad Khatib, a activist in a Palestinian organization against the security fence, said the purpose of their activity was "to prove to the world the racism and discrimination of the Israelis."
A number of Israeli peace activists were also present.
Khatib added that the Ministry of Defense was continuing construction on the Matiyahu neighborhood in the Modi'in-Ilit settlement on land declared as Palestinian by the Israeli High Court.
The ministry's civil administration argues that the land had been expropriated to meet the settlement's demographic needs.
"We also need buildings. The administration has to explain to the world why it is demolishing buildings we build for our needs while it continues to build on land that has been declared as ours by an Israeli court," Khatib added.
Khatib said a police force arrived at the outpost accompanied by a civil administration official. No violence was reported.
"We told them: You can demolish it but you will be breaching the law," Khatib said of the newly set up structure.
Khatib said villagers wanted to know why the administration refused to grant them building permits while it allows settlers to build in a "wild" manner.
Palestinian and Israeli peace activists have been holding protests against the fence section near Bilin every Friday for over two years and frequently clash with security forces.