Mohammed Haitham al-Tamimi, 3, from the village of Nabi Saleh was pronounced dead on Monday. Photo courtesy of Palestinian news agency Wafa
The Israeli Sheba hospital, where he was being treated since he was shot on Thursday, said the child "died... despite extensive efforts of the medical team".
In a statement, the Palestinian health ministry said it was informed of the "death of the child Mohammed Haitham al-Tamimi, 3, from the village of Nabi Saleh."
Tamimi was taken to Sheba by helicopter for treatment, before being pronounced dead on Monday.
Tamimi's father, Haitham was also wounded in the incident.
"I was with my child in my car, we wanted to visit family," Haitham al-Tamimi, 40, told AFP on Thursday evening after the incident.
"Suddenly they shot at me and my son, I thought it came from the (military) tower," he added from his hospital bed, accusing Israeli army of directly opening fire on his car.
The family told official Palestinian news agency Wafa the body would be returned on Monday evening.
Since the start of the year, Israel killed at least 156 Palestinians.
*This story was edited by Ahram Online