Fathi Asayira, a 24-year-old Palestinian man, was shot in the head and taken to hospital, where he is reported to be in stable condition following a clash between Israeli settlers and Palestinian villagers.
The B'tselem organisation said a group of settlers, some of whom were masked and armed, left their Yitzhar settlement and descended to the village of Asira al-Qibliya on 19 May.
The settlers started throwing stones at the homes of the Palestinian villagers, the organisation said.
Within minutes, a standoff began between the Israeli settlers and Palestinian youths, with both camps throwing stones at each other.
Several rounds of live ammunition can be heard being fired on the video, although the footage does not show where the shots came from.
According to B'tselem, Israeli soldiers and border police arrived at the scene within minutes. The video, posted on the organisation's website, shows a group of three settlers standing next to an Israeli soldier.
A group of Palestinians can be seen throwing rocks at them. Two of the settlers are armed with rifles and a third one can be seen holding a pistol.
The footage then shows the settlers aiming their weapons at the group of Palestinians.
Seconds later Asayira was hit in the head. He is in stable condition at a hospital in Nablus. Five other Palestinian villagers were injured in the confrontation.
"The video footage raises grave suspicions that the soldiers present did not act to prevent the settlers from throwing stones and firing live ammunition at the Palestinians. The soldiers did not try to remove the settlers and, in fact, are seen standing by settlers while they are shooting and stone throwing", B'Tselem said on its website.
The group has called for an investigation into the attack.
The Israeli military said an investigation had been launched but "it appears that the video in question does not reflect the incident in its entirety."
A spokesman for the settlement said the incident took place after Palestinians had set fire to a field near Yitzhar for the third week in a row, AP reported.
The spokesman, Avraham Binyamin, said the settlers' security squad and fire fighting team were attacked by dozens of Palestinians throwing rocks.
"When a person's life is threatened, it's his right to defend himself," AP quoted him as saying.
Binyamin also said the soldier who was in command did not take charge of the situation and quell the unrest, and fled after being struck by a rock.