Jerusalem's Shaarei Tzedek hospital, where both men were taken, said that the Israeli arrived in "critical condition" and later died of his injuries.
It said the attacker was moderately wounded.
"An assailant attempted to stab an Israeli at the Gush Etzion junction," an army statement said.
"Forces at the scene fired toward the assailant in order to thwart the attack. As a result the Israeli was injured. The Israeli and the assailant were both evacuated to hospital."
There was no immediate word from the army or the hospital on whether the dead Israeli was a soldier or a civilian.
A wave of Palestinian knife, gun and car-ramming assaults that erupted in October has claimed the lives of 28 Israelis, as well as an American, a Sudanese and an Eritrean.
The violence has also seen 176 Palestinians killed by Israeli forces, most while carrying out attacks but others during clashes and demonstrations, according to an AFP count.
The Etzion bloc of Israeli settlements, in the southern West Bank between Bethlehem and the flashpoint city of Hebron, has been a focal point of the unrest.
The Gush Etzion junction is a major hub for hitchhiking soldiers and settlers on the road between Hebron and Jerusalem.
