The protest was planned in Ramallah and a large crowd gathered when the Israeli forces used live fire to disperse them.
The attack left one Palestinian in critical conditions after being hit in the head.
The protest was held outside the al-Jalazun refugee camp in northern Ramallah following a march commemorating the first death anniversary of 13-year-old Ahmad Sharaka, who was killed by Israeli troops last year during clashes.
Israeli armed forces also used rubber bullets and tear gas to break up the gathering. The wounded were taken to the Palestine Medical Center for treatment.
The decision by Tel Aviv to limit Palestinian access to the al-Aqsa mosque in al-Quds (Jerusalem) flared up a new round of protests across the occupied lands, faced with brutal violence on the Israeli side.
Some 250 Palestinians have been killed by Israeli forces in what is regarded as the third Palestinian Intifada (uprising) since October 2015