Jerusalem Mayor Nir Barkat condemned what he said was a “horrible and barbaric murder”.
Israeli media said the Palestinian’s death was a “revenge killing” following the burial on Tuesday of teenagers Gilad Sha'ar, Naftali Frenkel and Eyal Yifrach.
An Israeli police spokesman said officers were investigating whether the 17-year-old’s disappearance and the discovery of the body were linked.
Arabs in the Shuafat neighbourhood clashed with Israeli security forces on Wednesday morning after news of the death emerged.
Israeli and Palestinian sources also both claimed the boy's death was unconnected to the murders of the Israelis, with rumours circulating that the finding of the body related to a family dispute or possible honour killing.
