The attack happened at a busy intersection in Gush Etzion, the IDF said.
An unidentified gunman opened fire at vehicles stopped in traffic before ramming his vehicle into pedestrians, according to the IDF.
The suspected assailant was arrested.
Among those killed was 18-year-old Ezra Schwartz of Sharon, Massachusetts.
Tori Bentkover, director of communications for the Consulate General of Israel to New England, says Schwartz graduated from Maimonides School in Brookline, Massachusetts, earlier this year and was studying in Israel at the time of his death.
A Palestinian man also was killed, emergency services told CNN.
A number of Americans were injured in the attack, according to Yehuda Meshi-Zahav, the chairman of ZAKA, an emergency response organization.
It was not immediately clear whether the victims were killed by gunfire or the impact of the vehicle. Gush Etzion is approximately 17 kilometers (10 miles) south of Jerusalem.
Earlier Thursday, two people were killed in a stabbing attack in Tel Aviv, according to Israeli police. The attacker was arrested and is in police custody. The two incidents make Thursday one of the deadliest days since the current spate of Arab-Israeli violence started in October.