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Both sides sustained light injuries as the soldiers removed about a dozen tents and small huts from land adjacent to the Palestinian northern West Bank village of Burin, Palestinian witnesses and the Army said.
It was the third time in recent weeks that Palestinians had set up an encampment in what they said was an attempt to hamper the expansion of Israeli settlements on the West Bank. The previous two were also cleared by Israeli security forces.
An Israeli military spokeswoman said troops used non-lethal riot dispersal means after Palestinians threw stones at them.
Settlers and Palestinians were also involved in a stone-throwing clash on a road nearby in which more people on both sides were lightly injured.
Palestinians want to establish an independent state in the West Bank, dominated by Palestinian President Mahmoud Abbas' Fatah faction, and the Gaza Strip, run by the rival Islamist group Hamas, with East Jerusalem as the capital.
About 500,000 Israelis and 2.5 million Palestinians live in the West Bank and East Jerusalem. Direct peace talks between Israel and the Palestinians broke down in 2010 over the issue of Israel's continued settlement building.
The Burin protesters said they had been buoyed by a report issued on Thursday by United Nations human rights investigators who called on Israel to halt settlement expansion and withdraw all settlers, adding that the practice could be subject to prosecution as a possible war crime.
Israel's foreign ministry swiftly rejected the report as "counterproductive and unfortunate." Palestinians welcomed the report, saying it vindicated their struggle against Israel.