Israel said the raid was in response to terror attacks
During a three-hour operation tanks and armoured bulldozers destroyed a Palestinian police station and two checkpoints and took up positions outside the governor's residence, before withdrawing.
Four Palestinian security officers were reported injured in gun battles with Israeli soldiers.
Witnesses said that Israeli helicopters flew above the town during the operation, and that Palestinian gunmen opened fire at the tanks.
An Israeli spokesman, Dore Gold, told the BBC that the raid was in response to what he said was the continued lack of action by the Palestinian Authority to stop terrorist attacks against Israel, and that Jenin had been a base for several recent attacks against Israel.
A Palestinian who launched a suicide bomb attack in Haifa on Sunday came from Jenin, as did the bomber who detonated last Thursday's suicide bomb in Jerusalem which killed 15 people.
A few hours after the incursion, Palestinian gunmen opened fire on a car near Hebron seriously wounding an Israeli settler and lightly injuring her three-year-old child.
There were also reports of heavy exchanges of fire between Israeli security forces and Palestinians near Bethlehem and a 22-year-old member of Palestinian leader Yasser Arafat's bodyguard, Force 17, was injured in Ramallah when his car was shelled by the Israelis.
Appeals to the UN
Jenin was handed over to Palestinian control in 1995, under the interim peace accord agreed at the Oslo peace talks.
In the wake of the incursion, the Palestinian Authority demanded that the UN Security Council meet immediately to provide international protection for the Palestinians.
Commenting on events in Jenin, a senior Palestinian official, Saeb Erekat told the BBC's World Today programme that Israeli Prime Minister Ariel Sharon "had opened hell's gate tonight.
"The endgame of Mr Sharon is to make sure that he closes every possible door for peace."
Strike protest
Palestinians on Monday staged a general strike in the West Bank and Gaza Strip to protest against Israel's seizure of Orient House, their unofficial headquarters in mainly Arab East Jerusalem.
Most Palestinian shops and businesses were closed, while Palestinian demonstrators and Israeli police again scuffled outside Orient House itself.
Ten protesters were arrested, as they struggled to raise Palestinian flags.
Israeli split
United Nations Secretary-General Kofi Annan demanded an immediate ceasefire and called for an end to the occupation of Orient House.
His appeal was echoed by US President George Bush, who said his administration was striving "to convince the parties". But he added that "the people in the area must make the conscious decision to
stop terrorism".
The Israel Government has declared that Orient House will never be handed back.
But doves in the Israeli cabinet, led by Foreign Minister Shimon Peres, believe that the hawks led by Mr Sharon may have committed a blunder by seizing the building.
Amid the protests, peace efforts were continuing, with Mr Peres being authorised to make contact with Palestinian representatives, but only to discuss a ceasefire and not for political negotiations.
Mr Peres denied that he had been ordered by Mr Sharon not to speak to the Palestinian leader Yasser Arafat.
"I have the right to meet every person I think I have to, including Chairman Arafat," said Mr Peres.
Meanwhile the political chief of Hamas said that suicide bombs were the only way to bargain with Israel.
Such attacks "force Ariel Sharon to accept Foreign Minister Shimon Peres negotiating with the Palestinians," said Khaled Meshaal.