One man, 51, was very lightly injured with bruises to his arms, the Magen David Adom rescue service said.
The attack took place at Kfar Adumim junction, and came closely on the heels of another attempted stabbing attack in the northern West Bank.
According to Israel Police and other initial reports, the terrorist, driving a Palestinian taxi, tried to ram his car into a group of Israeli pedestrians.
After failing to hit anybody, he got out of the car and attacked them with a knife.
The stabber was shot and killed by a civilian, police said.
According to police spokeswoman Luba Samri, the driver was a young man from the Palestinian village of al-Bireh near Ramallah.