An Israeli settler opened fire on a group of Palestinians throwing rocks at his vehicle, killing one and injuring a journalist.
The leader of the strike, Marwan Barghouti, also threatened to stop drinking water unless the prisoners' demands for improved prison conditions were met.
Demonstrations were being held throughout the Palestinian territories on Friday following calls by several militant factions in the Gaza Strip for a "Day of Rage" to take place.
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The hunger-strikers are calling for an end to the denial of family visits, the right to pursue higher education, appropriate medical care and treatment, and an end to solitary confinement and administrative detention, among other demands for basic rights.
In the video, the Israeli settler, who also appears to be protected by Israeli forces, was distributing chocolates to settlers to celebrate the killing of the Palestinian.
The shooter, a father of eight from Itamar in the West Bank who was on his way home from the supermarket, said he felt his life was in danger when he opened fire Thursday afternoon into a crowd of 200 Palestinians who were protesting in solidarity with hunger-striking Palestinian prisoners in Israeli jails, according to reports citing the Israel Defense Forces.
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Israel refuses to negotiate and has said prisoners' conditions meet all global standards.
Government spokesman Tareq Rishmawi condemned in a press release the killing of 23-year-old Mutaz Bani Shamsa as a "crime which is added to the long record of Israeli crimes against the Palestinian people".
Earlier in the week the Israeli navy shot a Palestinian fisherman dead off the coast of Gaza as he fished, claiming he posed a security threat. They condemn all acts of violence and terrorism attacking or endangering civilians, as well as all acts of provocation and incitement.
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We do not do this here. "There is no excuse for this kind of thuggish behavior", McCain initially tweeted after the incident. They stood peacefully waiting for Turkey's president to show up at the embassy in Washington, D.C.
However, onlookers said the killing was unnecessary as she could have been physically overpowered.