18-month-old Palestinian toddler Ali Saad Dawabsha burned to death by Jewish settlers
The arson attack in the village of Duma near the northern city of Nablus threatened to further tensions between Israelis and Palestinians, two days after Benjamin Netanyahu controversially approved 300 new settler homes in the West Bank.
According to Palestinian security officials, four assailants believed to be Jewish settlers set a house on fire at the entrance to the village and scrawled graffiti on a wall before fleeing to a nearby Jewish settlement.
Palestinian sources said those wounded included the toddler's parents and another child.
The arson attack follows days of tensions surrounding settlements in the West Bank, with rightwing groups opposing the demolition of two buildings under construction that the Israeli High Court said were illegal.
West Bank settlements are viewed as illegal under international law, but not by the Israeli government.
They are also major impediments to peace negotiations with the Palestinians, who see the land as part of a future independent state, and Western nations have called on Israel to halt construction.
Extreme-right Israeli activists have committed acts of vandalism and violence against Palestinians and Arab Israelis for years, attacking Christian and Muslim places of worship.
The attacks are known as "price tag" violence -- a euphemism for nationalist-motivated hate crimes by Jewish extremists.