His party, Fatah, has called the blast an assassination attempt by political rival Hamas.
Rabbi Raziel Shevach was killed in a drive-by shooting near his settlement on Tuesday.
The jihadi group threatened to attack the "pillars of tyranny that prop up" the Palestinian faction.
Syria, Iran and Hezbollah's so-called axis of resistance may have found itself new Palestinian and Iraqi partners opposed to Israel and the U.S.
Rockets were already fired at Israel from Gaza, but Hamas was seeking a popular uprising.
The militant group has indicated that it does not want an escalation with Israel.
Protests, violence and anti-Semitic attacks were on the rise after Donald Trump's decision to recognize Jerusalem as the capital of Israel.
Iran's powerful allies prepared responses to Trump's Jerusalem speech.
"Any decision to move its embassy there would be "a flagrant attack on the city by the American administration," Hamas said.
Yahya Sinwar, a hardliner who was elected head of Hamas in Gaza in February this year, made the comments at a meeting of Palestinian youth.
Qatari Finance Minister writes that the disruption is a catalyst for new commercial and diplomatic opportunities.
Thousands of camouflage army boots were to make their way to Hamas's military wing, Israel says.
The big domestic story of the year is the ongoing investigations into Netanyahu.
Fatah says it is ready for reconciliation with its Palestinian rival.
Shin Bet chief says Palestinian militants are deepening connection with the Iran's "Shiite axis."
Tehran fell out with Hamas when the Palestinian Islamist movement turned its back on Syrian leader Bashar al-Assad in 2012.
He remained silent, despite the Nazis flags and shouts of 'Jews will not replace us.'
The Israeli army has revealed details of a wall in the planning since 2014.
In a video, children appear to be dressed as militants, re-enacting recent clashes in the contested city.
Rights groups say that life in the coastal enclave has become "unlivable."
Gaza's health system has been on the brink of collapse for years. Now it has reached crisis point.
While the opposition elects an outsider, Netanyahu insiders face corruption charges.