There was no immediate statement from the Israeli army.
Protesters closed a road used by settlers with burning tires, after which scuffles broke out with settlers, according to an Associated Press reporter at the scene. The Israeli army intervened, firing stun grenades and tear gas to disperse the protesters.
Soon after, settlers and soldiers fired live ammunition, according to Wafa, the official Palestinian news agency.
Abu Alia was shot as he fled with a group of protesters. The ministry said five protesters were injured; three live ammunition and two rubber bullets.
Demonstrations against Israeli settlement expansion occur weekly in several parts of the West Bank, occupied by Israel in the 1967 Middle East war.
The Palestinians want the West Bank and Gaza Strip for a future state, as well as a capital in East Jerusalem. They say the building of settlements, which are home to half a million settlers, hampers an independent and contiguous Palestinian state in the future.
Most of the international community does not recognize the settlements and considers them illegal.