The Israeli army confirmed it had conducted an operation in Jenin refugee camp early Wednesday but firmly denied it had deliberately targeted a reporter.
The army said there was an exchange of fire between suspects and security forces and that it was "investigating the event and looking into the possibility that journalists were hit by the Palestinian gunmen".
"The (army) of course does not aim at journalists," a military official told AFP. A statement from Al Jazeera said: "In a blatant murder, violating international laws and norms, the Israeli occupation forces assassinated in cold blood Al Jazeera's correspondent in Palestine."
It called on the international community to hold the Israeli forces accountable for their "intentional targeting and killing" of the journalist.
Foreign Minister Yair Lapid said Israel was seeking a "joint pathological investigation into the sad death of journalist Shireen Abu Aqleh".
"Journalists must be protected in conflict zones and we all have a responsibility to get to the truth," Lapid added.
The US ambassador to Israel, Tom Nides, tweeted that he was "very sad to learn of the death of American and Palestinian journalist Shireen Abu Aqleh" and called for "a thorough investigation into the circumstances of her death".
The Israeli prime minister said Palestinian gunmen in the camp were likely responsible for Abu Aqleh's death.
"According to the information we've gathered, it appears likely that armed Palestinians - who were indiscriminately firing at the time - were responsible for the unfortunate death of the journalist," Bennett said in a statement.
The wounded Al Jazeera producer, Samudi, said there were no Palestinian fighters in the area where Abu Aqleh was shot.
"If there were resistance fighters, we would not have gone into the area," he said in testimony posted online, stating that the Israelis "fired towards us".
In recent weeks, the army has stepped up operations in Jenin, a historic flashpoint in the Israeli-Palestinian conflict. Several of the assailants blamed for deadly attacks on Israelis in recent weeks were from the area.
The army said that during its operation in the camp, "massive fire was shot toward Israeli forces by tens of armed Palestinian gunmen".
People in the camp "also hurled explosive devices toward the soldiers, endangering their lives. The soldiers responded with fire toward the sources of the fire and explosive devices. Hits were identified."
The fatal shooting comes nearly a year after an Israeli air strike destroyed a Gaza building that housed the offices of Al Jazeera and news agency AP.
Israel has said the building also hosted offices for key members of the Hamas Islamist group, which controls the Israeli-blockaded Gaza strip.
The Palestinian Authority called Abu Aqleh's killing an "execution" and part of an Israeli effort to obscure the "truth" about its occupation of the West Bank.
Hamas called the incident "a premeditated murder".
Qatar's assistant foreign minister Lolwah Al Khater said Israeli troops had killed Abu Aqleh "by shooting her in the face" in what she called an act of "state sponsored Israeli terrorism".
Tensions have risen in recent months as Israel has grappled with a wave of attacks which has killed at least 18 people since 22 March, including an Arab-Israeli police officer and two Ukrainians.
A total of 30 Palestinians and three Israeli Arabs have died during the same period, according to an AFP tally, among them perpetrators of attacks and those killed by Israeli security forces in West Bank operations.