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Israeli police said a number of armed Palestinians were killed during the hours-long battle deep inside the city of Nablus, without specifying. Police said no Israeli forces were wounded.
The Palestinian Red Crescent said the two men were killed in clashes with the military in Nablus and identified them as Aboud Sobh, 29, and Muhammad Al-Azizi, 22.
Israeli Prime Minister Yair Lapid said the suspects had been wanted for a series of shootings.
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The military was continuing to operate in another area of the West Bank, where another brief exchange of fire took place.
Israeli forces have been carrying out near-daily raids in the West Bank for months, in a bid to quell a spate of attacks by Palestinians on Israelis that has since subsided.
The military has faced resistance during some of those raids, which in several instances have turned deadly.
The Palestinian attacks on Israelis earlier this year killed 19 people. More than 60 Palestinians have been killed by Israeli forces since the start of the year, according to an official Palestinian tally.