An Israeli soldier has been killed in a gun and knife attack at a bus station in Beersheba, southern Israel.
The attacker was shot dead. Police said he was an Israeli Arab. An Eritrean bystander, mistaken as an accomplice, was shot and beaten, and later died.
Eight Israelis have died in Palestinian attacks this month. More than 40 Palestinians, including several attackers, have been killed.
The upsurge began amid tensions at a flashpoint holy site in East Jerusalem.
Israeli security forces have imposed tighter restrictions in Jerusalem and the West Bank, and there have been clashes with Palestinian protesters.
Israel has erected a 5m (16ft) high concrete barrier between the Palestinian district of Jabal Mukaber in East Jerusalem and the neighbouring Jewish settlement of East Talpiot, also known as Armon Hanatziv.
Israeli officials in Jerusalem insisted the wall was a temporary measure in an area "where there is a history of rock and Molotov cocktail throwing at Jewish homes and vehicles".
US Secretary of State John Kerry is to meet Israeli Prime Minister Benjamin Netanyahu and, separately, Palestinian President Mahmoud Abbas, this week in a bid to help restore calm.
In Sunday night's attack, police said the assailant - identified as a 21-year-old Bedouin from the town of Hura - entered Beersheba central bus station and started stabbing and shooting people.
He shot and killed 19-year-old Sgt Omri Levy, before taking the soldier's gun and continuing to shoot. The attacker was shot dead by security forces.
An Eritrean migrant was also shot by a security guard after being mistaken as a second attacker. As he lay wounded in a pool of blood on the floor, passers-by kicked and hit him. He later died of his injuries.
This attack will have particularly shocked Israelis as it came not in the Israeli-occupied Palestinian territory of the West Bank but deep inside Israel itself, the BBC's Middle East correspondent Kevin Connolly points out.
Earlier on Sunday, the Israeli military removed Jewish worshippers it said had illegally entered a religious site in the occupied West Bank.
Thirty Israelis arrived at Joseph's Tomb in the city of Nablus and were assaulted by Palestinians before being handed over to Israeli forces by Palestinian police, reports say.