The year-old outpost consisted of four tents and two makeshift buildings of corrugated metal and concrete and had about 10 residents.
But about 200 people from nearby Jewish settlements converged on the hilltop Thursday morning, blocking the road leading to Mitzpeh Yitzhar with cars, burning tires and sharp objects to hinder the authorities.
Settlers also set fire to underbrush and threw purple paint on armored bulldozers, limiting the visibility of the soldiers trying to make their way to the hilltop.
As part of the "road map" peace plan, which envisions the creation of a Palestinian state by 2005, Israel must take down unauthorized settlement outposts in the West Bank set up over the last two years. Officials from the Peace Now group, which opposes settlements, says there are 62 such outposts and a total of more than 100 set up since 1996.
Settler leaders have sued the government to prevent removal of inhabited outposts, but courts have rejected many of their arguments.
Mitzpeh Yitzhar is the first inhabited outpost to be dismantled, 10 uninhabited outposts were removed last week.
Between 300 and 400 soldiers, border police and civilian police got into running fistfights with the protesting settlers, bloodying some of them.
The soldiers and police were mainly unarmed, with most carrying only the knives they needed to remove the settlers' tents. After making it past the roadblocks, they began ripped down the tents with the knives and their bare hands.
The settlers let out occasional battle cries and charged a the ring of soldiers encircling the main tent. The authorities dragged several of the settlers out of the tent.
Yosi Peli, a settler from the nearby Yitzhar settlement, said that despite the large contingent of troops, the protesters remained committed to retaining the outpost.
"This is our land, our home," he said. "Tomorrow we will be here again on this hill or on other hills."
According to Peli, there had been minor confrontations at the outpost which have left two settlers injured.
Peli showed The Associated Press a list of rules of engagement provided by the settlers council. Demonstrators were advised to avoid violence and to use passive resistance.
But, Peli said, "When someone is trying to take you from your home it's difficult to know what will be."
(jk,rn)