Their white Subaru car was riddled with bullets fired by an undercover squad of the border police. All three were on Israel's wanted list, Israeli radio said. The army said were en route to a planned attack on Israelis.
The army banned journalists from al-Haruz neighbourhood, the scene of yesterday's clash. A large number of Israeli troops were seen in the area and residents said they were looking for militants who had escaped.
Hebron, where the Israeli settler Baruch Goldstein massacred 29 worshippers in a mosque just over a year ago, was tense even before the shooting. A round-the-clock curfew imposed on the town's 80,000 Palestinians at the beginning of Passover - and briefly lifted on Sunday - was reimposed.
During the clampdown on Islamic militants by the PLO in Gaza after suicide bomb attacks which killed seven Israeli soldiers and an American, Hamas said it would respond to repression with further attacks within Israel.
Militants portrayed the suicide bombs as a response to the deaths of Palestinians at the hands of Israelis.
In Gaza, a Palestinian military court jailed two Hamas activists for two years for giving illegal weapons-training. Prosecutor-General Khaled al-Kidra said the court sentenced Mohammad Abu Shamala and Riad al-Atar, whom Israel suspects of involvement in the killing of Israelis during the Palestinian uprising, the intifada, that began in 1987.
A PLO-Hamas truce agreed last week was disavowed by the PLO chairman, Yasser Arafat, who insists they must stop using Gaza as a base for attacks.
And although another Palestinian leader, Faisal Husseini, who is visiting Saudi Arabia,warned against treating militants more harshly, a weekend poll indicated that 79.7 per cent of Gazans supported Mr Arafat's demand that unlicensed weapons be handed to the authorities by 11 May.
Only 26.7 per cent favoured attacks on Israelis., half the number who said they approved of suicide bombings two months ago.