Ishtiwi was hit in the neck, the ministry said and died before arriving in hospital.
The ministry added that 17 other protesters were wounded.
The eyewitnesses said that dozens of Palestinian activists gathered close to the border fence between northeastern Gaza Strip and Israel and exploded sound bombs on Sunday night, Xinhua news agency reported.
"They are hurling rocks at (Israeli) troops and towards the security fence, as well as a number of explosive devices that did not cross the fence", a spokesman said, adding that they had heard grenade explosions.
Meanwhile, a senior United States official said that Palestinian officials have been invited to a U.S. conference on the Middle East hosted by Poland next week where White House senior adviser Jared Kushner will discuss plans for peace between the Palestinians and Israelis.
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An Israeli military spokesperson said soldiers on Friday used riot dispersal equipment and opened fired "in accordance with standard operating procedures".
Meanwhile, Palestinian sources in Gaza close to Hamas said that the movement informed officials in the Egyptian security intelligence that the movement intends to escalate the marches of return within the coming days.
Israel accuses Hamas of exploiting the protests as a cover to carry out attacks against its soldiers.
Earlier this week, Israel began reinforcing its Gaza security fence with a galvanized steel barrier 65 kilometers long (40 miles) and six meters high (20 feet).
Hundreds of Palestinian demonstrators arrived on Friday afternoon in eastern Gaza Strip to join the 46th rallies, part of a weekly anti-Israel protests, better known as the "Great March of Return", which started late last March.