Palestinian medics reported that a foreign activist was shot during the demonstration in the town of Beita, while the Israeli military said it was looking into the incident.
The activist, who asked to use a pseudonym, Amado Sison, for security concerns, said he joined the rally to help defend Palestinians.
"There was a demonstration and we were there to film, to make sure we have eyes on the (Israeli) occupation army," he told AFP from hospital bed in the northern West Bank city of Nablus.
"At one point we ran away... and they shot me in the leg."
Israeli troops were "firing tear gas at us, live rounds," Sison added.
As the Israeli force approached the protesters, "we ran into the olive groves and when I was running away they shot at us and it went through my leg", he said.
The Palestinian Red Crescent said in a statement that its crews were "dealing with the injury of a 40-year-old foreign activist who was shot in the thigh with live ammunition during clashes with the occupation forces".
It did not specify the activist's nationality.
Foreign activists often join Palestinian protesters for near-weekly demonstrations against settlement expansion in Beita, said another foreign activist, who asked not to be named for security concerns.
The activist, who attended Friday's protest in Beita, told AFP that the only opposition came from the Israeli army, with no Israeli civilians around.
"It was the official Israeli army that shot an American citizen," she said.
Israel has occupied the West Bank since 1967 and built settlements that are illegal under international law.
Excluding east Jerusalem, the territory is home to about three million Palestinians who live alongside some 490,000 Israeli settlers.
The European Union's representative office in the Palestinian territories said earlier this month that Israel advanced last year the highest number of West Bank settlements since the Oslo Accords of the 1990s.
The West Bank has seen a surge in already heightened violence since war broke out in October between Israel and Hamas in the Gaza Strip.
At least 617 Palestinians have been killed by Israeli troops or settlers in the West Bank since October 7, according to an AFP tally based on Palestinian official figures.
At least 17 Israelis, including soldiers, have been killed by Palestinian attacks in the West Bank over the same period, according to Israeli official figures.
