Palestinians reported that the troops tried to arrest Nawahada while he was sitting in a café, but he had tried to escape and was killed in an exchange of fire with the force.
According to the IDF, the wanted man tried to escape, prompting the force to fire at the lower part of his body. The security forces planned to evacuate him to an Israeli hospital, but he died of his wounds and was handed over to the Red Crescent rescue organization.
Defense officials said Nawahahda was planning to carry out a terror attack in the coming days.
Incident may hamper truce talks
Nawahahda, a senior member of the Islamic Jihad's military wing in northern Samaria, was arrested by the Palestinian Authority in 2008. During his arrest, his car flipped over and the PA security forces fired at him. The event sparked tensions between the Islamic Jihad and the PA.
Upon his release last September, Israeli defense officials say, he returned to terror activities.
Two of Nawahada's brothers, who are also affiliated with the Islamic Jihad, are jailed in Israel. The al-Quds Brigades issued a statement threatening to avenge his death.
Sources in the Islamic Jihad said Tuesday's incident raised many questions as to the need to continue the ceasefire with Israel, particularly in light of the fact that the truce does not include the West Bank for the time being.
This incident may also hamper the talks for the renewal of the lull, which will be officially over in the coming weekend. All the Palestinian organizations have expressed their reservations over the truce which took effect in June, as it did not include the West Bank.
Efrat Weiss contributed to this report