Eight Israeli personnel were wounded after troops came under fire during an operation in the flashpoint city of Jenin to arrest two Palestinians suspected in attacks, the military said.
At least three of the Palestinians killed in the fighting belonged to the armed Islamic Jihad group.
With US-sponsored peacemaking stalled for almost a decade, Jenin and other areas of the northern West Bank have been a focus of months of stepped-up sweeps by Israel amid a spate of Palestinian street attacks in its cities.
As troops faced heavy fire and a rain of explosive devices from gunmen in the city, the army said it was forced to mount an extraction mission to pull out the wounded and a number of its vehicles blocked in the fighting.
"So that's why you saw also our forces in a very problematic area and we had to bring in a helicopter," an army spokesman told reporters.
The unusual use of helicopter gunships in the operation underlined the intensity of the fighting in Jenin, where armed militant groups including Hamas and Islamic Jihad have long had a strong presence in the adjoining refugee camp.
Bezalel Smotrich, the head of one of the parties in Prime Minister Benjamin Netanyahu's religious-nationalist coalition, said the government should launch a broad offensive operation "to restore deterrence" in Jenin, Nablus and other West Bank areas.
"It's time for the gloves to come off," he said.
Video filmed by a local resident and obtained by Reuters showed an explosion enveloping an armoured troop transport as shots ring out.
Other clips showed a military helicopter launching a missile and releasing flares.
Israeli media said use of helicopter gunships was a 20-year first in the West Bank.
The Israeli military did not immediately respond to a request for comment on when it had last used them there.
A military spokesman said an Apache helicopter fired on an open area in order to drive back gunmen as casualties were extricated from the troop transport.
"We're aware Palestinians are hit, quite a big number," the spokesman said.
An Islamic Jihad official said the use of aircraft "will push our fighters to use tools that will surprise the enemy".
An official from the Fatah party said fighters from the nearby cities of Nablus and Tulkarem had arrived in Jenin to support the local fighters.
"We tell this occupation that all their operations are a failure, our people will win and the dialogue between us will only be the battlefield," Atta Abu Rmeileh said.
The Palestinian health ministry said the five killed during the fighting included 15-year-old Ahmad Saqer.
Islamic Jihad claimed three of the dead as members.
Another 91 Palestinians were wounded, among then 23 people in critical condition, the ministry said.
Some Palestinian journalists said Israeli forces fired at them during Monday's operation, even though they were wearing clearly identifiable blue body armour with Press markings.
The head of the Red Crescent in Jenin, Mahmoud al-Saadi, told Reuters his medical teams also came under Israeli fire while transporting the wounded, damaging two ambulances.
The Israeli military said it was unaware of any fire at medics or journalists but was reviewing the incident.
Hamas said a number of its fighters also took part in the clashes.
By late afternoon, the military said all its forces had left the city.
The United Nations Special Co-ordinator for the Middle East Peace Process Tor Wennesland said that escalations like the one in Jenin risked plunging the region into a deadly crisis and said both sides should re-engage on a political path.
Defence Minister Yoav Gallant said Israel would employ whatever means it thought necessary.
"There are no compromises in the fight against terrorism, we will continue to take an offensive approach. We will use all the means at our disposal," he said on Twitter.
