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"A knife attack was reported at the Gush Etzion junction, south of Bethlehem," the army said in a statement. "The attacker was neutralised."
Gush Etzion is a bloc of two dozen Israeli settlements and outposts near Bethlehem, deemed illegal under international law.
Jewish settlers there are protected by heavily armed Israeli soldiers.
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There is frequent friction at the nearby junction, which has been the site of violence between Palestinians and Israelis.
Israel has occupied the West Bank since the 1967 Six-Day War.
There are currently about 475,000 Jewish settlers in the West Bank living in communities considered illegal by the international community, alongside some 2.8 million Palestinians.