Israeli and Palestinian officials identified the attacker as a young Palestinian man, but they gave conflicting accounts of the events surrounding the incident.
An Israeli police official said authorities were treating the stabbing as "a terrorist incident," while a Palestinian medic said the suspect himself had been attacked.
Red Crescent official Abdul-Halim Jaafra, citing witnesses, said a mob of 15 settlers attacked Hamzah Zaoul, 22, at the entrance of Husan village, his hometown.
Jaafra, the director of the Red Crescent's emergency department in Bethlehem, told Ma'an that Israeli forces prevented medics from treating Zaoul before his arrest.
Locals said Zaoul left home following a family dispute. He got into a fight with his brothers and attacked the settlers to "vent anger," a neighbor in Husan said.
Husan is close to the entrance of the illegal settlement of Beitar Illit where Israel police spokesman Micky Rosenfeld said the Palestinian stabbed and moderately injured the Israeli.
Rosenfeld told Ma'an that the victim suffered moderate injuries after being stabbed in the back and shoulder, and was taken to hospital for further treatment.
The suspect is being interrogated by Israeli security officials, he added.
Rosenfeld said he was unaware of any altercation leading up to the stabbing and said it was still being treated as a "terrorist incident." He emphasized that the victim was attacked from behind.
"The investigation is ongoing," Rosenfeld said.
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