The Prison Service suspects that a consensual physical interaction occurred between the guard and the prisoner, Ynet reported.
However, the guard's lawyer has denied that his client had a consensual relationship with the prisoner, saying she was threatened into allowing his abusive behaviour.
The women has been arrested and an investigation launched into the incident. The name of the soldier and the inmate serving a life sentence have not been released.
An Israeli court hearing the case ordered that other details including the location of the prison should not be revealed.
The terrorist has been placed in solitary confinement.