Islamic Jihad says it was behind the Friday night killing of a seven month old and a 28-year-old man in a Jewish village close to Hebron.
The terrorist, Mahmoud Hamadan, managed to enter Negohot, despite the security presence.
He knocked on the door of a residential caravan, where a family was eating the traditional New Year evening meal.
Hamadan opened fire, killing two. A reserve soldier was eating with the family, and he managed to open fire. The terrorist fled, but was killed by other soldiers outside the caravan.
Negohot is an isolated village, south of Hebron, in an area that has been relatively quiet during the last three years.
It joins the long line of Israeli villages in Judea and Samaria that have come under fire during Jewish Sabbaths and festivals.
Meanwhile, the Palestinians say Hamadan was freed from jail by Israel just two months ago.