The army confirmed the incident but said it was done by a lone soldier who acted on his own and would face a disciplinary hearing.
Palestinians with three-digit numbers scribbled on their palms said they told the soldiers they considered the practice degrading, but they were given a choice to either turn back or submit to the marking.
A similar incident happened in March 2001 when soldiers marked numbers on the foreheads and forearms of Palestinian detainees awaiting interrogation during an army sweep of a West Bank refugee camp.
At the time, the action drew outrage from an Israeli lawmaker who survived the Holocaust, and the practice was halted. During World War II, Nazi concentration camp inmates, most of them Jews, had numbers tattooed on their forearms.
Monday's incident took place at the Hawara checkpoint, just south of Nablus and one of the busiest areas in the West Bank.
In the past 31 months of fighting, Israel has enforced stringent travel bans on Palestinians as part of a campaign to keep militants from carrying out attacks in Israel. Palestinians need special permits to move from community to community.
During Monday morning rush hour at Hawara, hundreds of Palestinians were waiting at the checkpoint on their way to jobs and schools in Nablus.
Arabic language professor Hamdi Jabali and insurance agent Wael Dwaikat were among those in line.
"A soldier came and told me, 'Give me your hand,'" Jabali, 46, said. "I said, 'Why?' and he said, 'I want to write a number on your hand.' I told him, 'This is not human. We use this only for animals,' and he told me 'If you don't want it you can go back.'"
Jabali, who was given the number 125, said some of the 100 or so people waiting in front of him when he arrived at 8 a.m. turned back instead of accepting the numbers.
"I thought about going back, but I couldn't because I had many lectures, many appointments," he said.
Jabali, from the village of Beita seven miles south of Nablus, said he attempts to cross the checkpoint every day to reach his job at An Najah University in Nablus. About half the time he is turned away and forced to cross long, difficult routes through the mountains.
Dwaikat, who was assigned the number 113, said residents waiting to cross tried unsuccessfully to convince the soldiers that they would line up in an orderly fashion without soldiers marking their hands.
"But the soldier said: 'These are our orders. If you will not accept that, you will not enter the city.'"
The military said in a statement that "at a checkpoint near Nablus, soldiers handed out numbers to those passing the checkpoint, as part of a routine inspection."
"At a certain point, they ran out of numbers, and one soldier continued writing numbers on the hands of those passing," the army said.
The army said the "soldier made a flawed decision, on his own, in contrary to army regulations." Soldiers were told "there is no place in the army for such actions," the statement said.
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