Ziad Abu Ein had died from complications related to tear gas exposure in the incident near the village of Turmusaya, doctors said.
Several witnesses said the minister had been hit and shoved by soldiers. One said he had been hit in the chest by a tear-gas canister fired by them.
The Israeli military (IDF) said it was looking into the reports.
EU foreign policy chief Federica Mogherini called for an “immediate and independent” investigation and said that reports of “excessive use of force” by Israel were “extremely worrying.”
A statement released by the IDF said its forces had “halted the progress of rioters into the civilian community of Adei-Ad using riot-dispersal means”.
“The IDF is reviewing the circumstances of the participation of Ziad Abu Ein, and his later death,” it added.
Following the incident dozens of Palestinians have gathered at the spot near Turmusaya setting fire to tires and throwing rocks at security forces, Voice of Israel radio station reported.
The radio also said that Israel has proposed to set up a joint team with the Palestinians to investigate the death with experts from Israel and Jordan to attend a post-mortem examination.
In recent weeks, 10 Israelis and an Ecuadorean have been killed by Palestinians in a series of attacks. Thirteen Palestinians have also been killed, among them several of the assailants.
Ziad Abu Ein, a minister without portfolio, was among dozens of foreign and Palestinian activists taking part in a protest against land confiscations.
They had planned to plant olive tree saplings on a patch of land near the Jewish settlement of Shiloh, which Palestinians believe has been earmarked for annexation by Israel.
In the course of the protest, they came into confrontation with a group of about 15 Israeli soldiers.
Leading Palestinian activist Mahmoud Aloul, who was also at the protest, told the Associated Press news agency that the soldiers had fired tear gas and had beaten some of the activists with rifle butts.
At one point, Ziad Abu Ein was hit by a tear gas canister, Mahmoud Aloul said.
The Reuters photographer said he had seen Ziad Abu Ein being struck by a hand on the neck during an altercation with two soldiers.
An AFP news agency photographer said the minister had been hit in the chest.
Photos of the incident showed Ziad Abu Ein lying unconscious before he was taken away in an ambulance. He died before reaching hospital in the nearby city of Ramallah.
There are reports that Ziad Abu Ein had a health condition that may have contributed to his death.
Condemning “the brutal assault” on Ziad Abu Ein as a “barbaric act”, Palestinian Authority President Mahmoud Abbas promised to take unspecified measures and declared three days of mourning.
A senior Palestinian official said the Palestinian Authority would halt security co-ordination with Israel.
Hanan Ashrawi, a senior official in the Palestine Liberation Organization (PLO), said that she was “outraged” by the minister’s death.
“It’s extremely sad that a colleague and an old friend has been killed in such a cruel way” she said.
“Ziad was guilty of nothing more than planting olive trees where Israel would uproot trees.”
Ziad Abu Ein once received the death sentence, commuted to life imprisonment, from a court in Israel for a 1979 bombing that killed two Israeli teenagers. He was released in 1985 as part of a prisoner exchange that saw the release of three Israeli soldiers captured in Lebanon.
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