Both the child's parents and his four-year-old brother were badly hurt.
Suspected Jewish extremists set fire to a Palestinian home in the occupied West Bank on Friday, killing an 18-month-old baby and seriously injuring several other family members, an act that Israel's prime minister described as terrorism.
The house in Duma, a small village near the city of Nablus, was torched in the early morning as the family slept. Graffiti in Hebrew reading "revenge" was scrawled on the wall outside, police and witnesses said.
Both the child's parents and his four-year-old brother were badly hurt. They were taken by helicopter for treatment in an Israeli hospital, officials said.
It was the worst attack by Israeli extremists since a Palestinian teenager was torched to death in Jerusalem a year ago. That followed the kidnapping and killing of three Israeli teenagers by Palestinian militants in the West Bank.
Ibrahim Dawabsheh, a Duma resident, said he heard people shouting for help from the house and rushed to it. "I saw two masked men outside," he told Reuters. He went to call for help and when he returned they were gone, Dawabsheh said.
"We found the parents outside with burns, they said there was another son in the house, we brought him out and then they said there was another boy inside, but we couldn't reach the bedroom because of the fire. He was left inside until rescue forces came," Dawabsheh told Reuters.
Israeli Prime Minister Benjamin Netanyahu said he was shocked. "This is a terrorist attack. Israel takes firm action against terrorism, no matter who its perpetrators are," he said in a statement, adding that "all means" would be used to bring the assailants to justice.
Israeli military spokesman Lieutenant-Colonel Peter Lerner said an investigation was underway and called the attack "nothing short of a barbaric act of terrorism."
A spokesman for Palestinian President Mahmoud Abbas said Israel was responsible. "Such a crime would not have occurred if the Israeli government did not insist on pursuing settlements and protecting settlers," Nabil Abu Rdainah said in a statement on the official Palestinian news agency WAFA.
Israeli Police spokeswoman Luba Samri said the torching was an apparent "Price Tag" attack, a reference to militant settlers who threaten to exact retribution for any Israeli government curbs on settlement expansion in the West Bank.
Israel tore down two illegal structures in the Beit El settlement near Ramallah and removed dozens of people from another settlement near Nablus on Wednesday, sparking protests.
The "Price Tag" group has been blamed for torching a number of mosques in the West Bank in recent years. Those attacks caused widespread damage but no casualties.
Though Israel has vowed to crack down on such assailants only a handful of indictments have been handed down.
The Palestinians seek a state in the West Bank, East Jerusalem and the Gaza Strip. In the West Bank, the Palestinians have limited self rule, but nearly 60 percent of the territory remains under full control of the Israeli military.
Israeli settlements are considered illegal under international law. The last round of U.S.-brokered peace talks between Israel and the Palestinians broke down in 2014.