A United Nations agency that monitors incidents said earlier this year that an increase in settler violence had occurred alongside a major rise in Palestinian attacks against Israelis, the vast majority of which involved stone-throwing at vehicles. The settlers then entrenched themselves in a cave near the village until Israeli forces evacuated them, it said.
Israel's military said the settler had opened fired in self-defence after Palestinians threw rocks at a group of hiking settlers and students.
IDF soldiers arrived at the scene and treated the Palestinian.
The Israeli army said the shooter, one of two armed escorts, was defending the hikers, a group of about twenty 13-year-old boys, when Palestinians began throwing stones at them.
The BBC's Tom Bateman in Jerusalem says tensions between settlers and Palestinians in the occupied West Bank have been on the rise.
"The detainees have since been referred to investigation by the security forces", the statement read. Israeli police said they were investigating the incident.
One of the children said a Palestinian man discharged pepper spray into the cave while they were inside it. Police spokesman Micky Rosenfeld said forces were searching for the suspect who fled the scene.
Local residents told Ma'an that Mr Odeh tried to stop the settlers from entering his land and they shot him in the chest.
Yesh Din human rights organization said the hikers came from the nearby illegal Esh Kodesh outpost and entered Palestinian farmland outside Qusra.
According to Ghassan Daghlas, a Palestinian Authority official who monitors settlement activity in the northern West Bank, Israeli soldiers took Odeh's body into custody as it was being taken to a hospital in the city of Nablus.