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According to an initial report from the IDF, Younis Obaidi from Beit Hanina drove the tractor towards a base near Al-Ram, southeast of Ramallah, ramming the mechanical digger through a gate in the base's perimeter fence.
"A Palestinian ... posed an immediate life threat to soldiers nearby. They opened fire towards the suspect and reported a direct hit," an IDF spokeswoman said.
An IDF soldier was lightly injured by the tractor.
Obaidi's brother, Mir'i Radeideh, also attempted to carry out a terrorist attack with a tractor, in March 2009. Radeideh attempted to run over two policemen in a police car in Jerusalem in March 2009. He was also shot to death.
Obaidi arrived at the base and directed his vehicle towards the IDF soldier guarding its entrance, according to a Channel 2 report.
The guard entered into the base to ask if the tractor had authorization to enter.
At this point, Obaidi took advantage of the guard's absence and drove through the entrance barrier of the base and started driving quickly inside the base.
The guard began to chase the tractor and yelled for him to stop but Obaidi continued, recklessly hitting vehicles parked inside the base.
An officer joined the first soldier and the two fired at the tractor driver, seriously injuring him. Obaidi passed away from his wounds shortly thereafter.
The IDF was investigating the circumstances of the attack.
Reuters contributed to this report.