Witnesses say Israeli forces stormed the old city and surrounded a house, using live bullets and tear gas canisters against the Palestinians.
Israeli army killed two Palestinians overnight during a raid in the occupied West Bank city of Nablus, the Palestinian health ministry has said.
The ministry said early on Sunday that Muhamad Azizi, 25, was killed by a bullet to the chest while Abdul Rahman Jamal Suleiman Sobh, 28, was shot in the head.
The Palestine Red Crescent Society said in a statement that eight others were injured from live bullets during the operation, adding that four of the wounded were shifted to a nearby hospital.
The Israeli army said it was carrying out an operation in Nablus, in the occupied West Bank, without immediately commenting on the Palestinian report of casualties.
In a statement it said there were exchanges of fire between armed suspects and troops.
At least 52 Palestinians have been killed by Israeli forces since late March, mostly in the West Bank, including Al Jazeera journalist Shireen Abu Akleh, a Palestinian-American dual national, who was covering an Israeli raid in Jenin.
Israeli security forces have launched near-daily raids in the occupied West Bank following a spate of attacks in Israel in recent months.
Israel occupied the West Bank in the 1967 Mideast war and the Palestinians want the territory returned in accordance with international law to form the main part of their future state.
Almost half a million Israeli settlers live in dozens of illegal settlements scattered across the occupied West Bank, alongside around 3 million Palestinians who live under Israeli military rule.
The Palestinians and much of the international community see Israel’s occupied West Bank settlements as a violation of international law and an obstacle to a peaceful resolution of the decades-long conflict.