The incident took place in the Israeli city of Beersheba (Bi’r as-Sab) at a bus station on Sunday evening, Press TV reported.
An unidentified man, shot dead later, entered the place, stabbed a soldier, took his weapon and started firing at the crowd, injuring 11 people, including at least four other soldiers.
Some other reports, however, said that the man fired with his own pistol.
A bystander of Eritrean origin, not involved in the attack, was also killed by Israeli police who mistook him for a second gunman.
The soldier succumbed to his wounds later in a nearby hospital with reports saying that two of the wounded were in critical condition.
The identity of the man was not immediately known while there was no claim of responsibility for the attack.
The latest wave of tensions was triggered by the Israeli regime’s imposition in August of restrictions on the entry of Palestinian worshipers into the al-Aqsa Mosque.
The Palestinian Ministry of Health says that at least 45 Palestinians have been killed across the occupied territories since the beginning of October.
Palestinians are also angry at increasing violence by illegal Israeli settlers, who frequently storm al-Aqsa Mosque, the third holiest site in Islam after Masjid al-Haram in Mecca and Masjid al-Nabawi in Medina. They say the Tel Aviv regime seeks to change the status quo of the compound.