The violence drew vows of revenge from Islamic Jihad, a group that has spearheaded attacks against Israel throughout a more than five-year Palestinian uprising.
An Israeli military spokesman, Captain Jacob Dallal, said soldiers shot dead Elias Eshkar, a "top Islamic Jihad terrorist in the West Bank" blamed for being the mastermind of attacks that have killed more than 50 Israelis since early 2005.
The most recent suicide bombing blamed on Eshkar killed 11 people in a Tel Aviv restaurant in mid-April, the highest death toll in an attack in the Jewish state in about two years.
House surrounded
Four other militants died in the raid, in which soldiers surrounded a house in the town of Qabatiya as Eshkar hid inside, including Eshkar's brother, Captain Dallal said.
The troops killed the gunmen after they shot at the soldiers, ignoring an appeal to surrender. "The force encircled a house," he said.
Soldiers "called to those inside to come out. Instead the force was fired on from inside the house and from buildings surrounding the house. They returned fire" and later bulldozed the building, Captain Dallal said.
The soldiers shot dead a sixth Palestinian while dispersing protesters during the raid, he said. Palestinian medics and security sources said two of the six killed in Qabatiya were civilians.
In the nearby town of Jenin, soldiers shot dead Ali Omar Jabarin, a 21-year-old intelligence officer, and wounded four of his colleagues during a gunbattle at their Jenin headquarters.
The Israeli army said soldiers exchanged fire with gunmen during a raid in Jenin to detain wanted militants, and reported that one Palestinian was hit by gunfire there, but could not confirm whether he was killed.
The bloodshed was the worst for a single day since Israel killed eight militants in a Gaza air raid on April 8, though tensions have risen since a government led by Hamas, whose charter calls to destroy Israel, rose to government in March.
Attacks condemned
Islamic Jihad's armed wing condemned the Israeli raids in a statement as "a new Zionist massacre" and vowed that "we will continue our martyrdom operations".
Palestinian President Mahmoud Abbas issued a statement condemning the violence and urged the world to intervene. "The Israeli grave escalation will lead the region to more violence and instability," he said.
In the Gaza Strip, masked gunmen shot and wounded a Palestinian bodyguard for an intelligence chief reporting to Mr Abbas.
Gunmen later fired at a senior Hamas commander as he left a Gaza City mosque, witnesses said. He was unharmed.
There was no immediate claim of responsibility for the shootings, which were further cases of internal violence in Gaza where rivalry between Hamas and Abbas's Fatah faction has led to bloodshed in recent weeks.