In a statement, Shin Bet said a number of their agents were travelling in a military jeep in the West Bank when a Palestinian car slammed into them, flipping their vehicle.
The Palestinian driver then got out of the car and began attacking the agents with an axe, the statement said. One of the agents shot and killed the man.
Earlier, Israeli police had said the jeep was carrying Israeli soldiers, but the military had no comment.
Palestinian security sources said they had been informed of the incident, but the area where it took place had been declared a closed military zone.
They identified the man as Hatem Shabib, from a village near the northern West Bank city of Tulkarem.