The sodlier was later identified as Staff Sergeant Ben-Zion Haim Henman, 22, of Moshav Nov in the Golan Heights.
The IDF operation was launched in response to several intelligence warnings, regarding intended terror attacks on Israelis during the Jewish holidays. During the night, the military ordered a closure of the refugee camp.
Since then, Palestinian gunmen fired on the soldiers in at least 10 separate incidents, leading to repeated gun battles between the two sides. It was during one of these clashes that the soldier was killed and his comrade wounded from shrapnel.
Also during the night, an explosive device was thrown at soldiers, but no one was injured.
Palestinian sources reported that IDF efforts were concentrated on cell of the Popular Front for the Liberation of Palestine (PFLP). According to the source, a young operative was killed during clashes with the IDF.
Soldiers opened fired at the young man, Muhammad Halad, critically injuring him. Since medical teams were unable to approach the scene of the fighting in order to treat him, he died of his wounds on the spot, Palestinians said.
The operation Tuesday was targeting Hamas and PFLP members in the refugee camp, whom the IDF says are working jointly in order to plan terror attacks. Due to the increased terror warnings, forces have raided the camp the past several nights in order to arrest wanted terror operatives. At such times, armed clashes often take place.
'An entire world behind his blue eyes'
Ben-Zion Haim Henman was born at the community of Susia in the southern Mount Hebron and had nine bothers and sisters.
When Ben-Zion was a child, the family moved to the Golan Heights. His father Yaakov works in agriculture and his mother Tamar is an educational consultant. Ben-Zion studied at a yeshiva in Jerusalem, and after graduating from high school studied for a short while at a yeshiva in Mitzpe Ramon.
He served in the IDF as a paratrooper at the Haruv Battalion, and was scheduled to complete his compulsory service in about a month.
"Ben-Zion's dream ahead of the end of his military service was to travel the world, and then to study agriculture and become part of the family's vineyard and organic olive grove business," his older brother Roi, 27, said.
"Ben-Zion didn't talk a lot, but there was an entire world behind his penetrating blue eyes, which died in the Nablus battle," his family members said.
This was a second personal tragedy for Ben-Zion's mother, who lost her first husband in a road accident 30 years ago.
Ali Waked and Hagai Einav contributed to this report