The armed confrontation occurred on Sunday morning in the Old City, at the Bab al-Silsila (Chain Gate) to the Al-Aqsa Mosque compound, in occupied East Jerusalem.
According to local reports, the Palestinian man was identified as 42-year-old Fadi Abu Shkheidem, a resident of Jerusalem’s Shuafat refugee camp.
The settler, in his 30s, suffered a head injury and succumbed to his wounds after being transferred to hospital, Israeli media reported.
Another Israeli settler, a 46-year-old, was in stable condition, according to a statement by Hadassah Medical Center. Two police officers, aged 30 and 31, were also lightly wounded.
The Palestinian man reportedly used a submachine gun and a knife to carry out the attack.