The woman succumbed to her wounds after Israeli forces opened fire at her at the Qalandiya military checkpoint between the central West Bank city of Ramallah and occupied East Jerusalem on Wednesday morning.
A video of the incident circulating on local media showed Israeli security personnel shooting a woman in the leg at close vicinity.
According to official Palestinian news agency WAFA, Israeli forces opened fire at the woman - who has not yet been identified - and wounded her even though she "posed no threat".
Witnesses told another local media outlet that the woman was left bleeding at the side of the road for "a long time" before being transported to a hospital in Jerusalem where she was pronounced dead.
The Palestinian Health Ministry confirmed later that she succumbed to her wounds.
Israeli police spokesman Micky Rosenfeld said the woman had approached security forces at the vehicle passage of the checkpoint, ignoring calls to stop and pulling a knife before being shot in the leg.
Police distributed a picture of a yellow-handled knife they claimed she had held.
A number of local and international human rights groups have raised concerns that Israeli security forces have used excessive force when confronting Palestinians who carried out attacks or were suspected of doing so.
The Israeli police relaxed its open-fire regulations in 2015, permitting officers to open fire with live ammunition on those throwing stones or firebombs as an initial option, without having to use non-lethal weapons first.
The incident comes a day after Israel held a general election that saw Prime Minister Benjamin Netanyahu and his main challenger Benny Gantz neck and neck in the race to lead negotiations on forming a new government.
Source: Al Jazeera