Footage from a security camera that captured the incident shows the man, Yassin Omar al-Saradih, running towards the Israeli force and being shot.
At the end of the video, a soldier is seen beating the Palestinian with his rifle before he succumbed to his wounds.
The IDF Spokesperson's Unit said in response: "A violent disturbance developed during an activity in search of wanted men in the city of Jericho, in which a terrorist armed with an iron rod ran towards an IDF force and tried to attack the soldiers.
"In response to the immediate threat, the troops fired towards the assailant and confronted him from close range and were able to stop him," the IDF said.
"A knife was also found in his possession. Troops evacuated him to a hospital to receive medical treatment. His death was later announced. The incident is being reviewed."
The Palestinian Information Ministry said about 20 soldiers had administered a "heavy beating" to al-Saradih, especially on his stomach and back.
"The Information Ministry views (his) martyrdom ... shortly after his arrest a cold-blooded execution," it said.
Al-Saradih's family members also claimed he was violently attacked by soldiers who arrived to arrest him and was taken away from his home. The family is seeking to have an autopsy performed.
Reuters contributed to this story.