The Jerusalem Post said the motive for and circumstances surrounding the Monday death of Mer-Khamis remain under investigation.
Although numerous people were arrested for their alleged involvement in his slaying, most of the suspects have already been released from police custody, the newspaper said.
The number and identities of those arrested were not reported.
The 52-year-old Israeli-born actor, filmmaker and peace activist was shot dead in his car by a masked assailant Monday in the West Bank City of Jenin where Mer-Khamis lived with his wife, who is pregnant with twins.
Palestinian Authority Prime Minister Salam Fayyad condemned the deadly shooting.
"We cannot stand silent in the face of this ugly crime," the Post quoted Fayyad as saying. "It constitutes a grave violation that goes beyond all principles and human values, and it contravenes the customs and ethics of coexistence" between Israelis and Palestinians.
Mer-Khamis, whose mother was Jewish and father Palestinian, recently appeared in Julian Schnabel and Rula Jebreal's movie "Miral," the story of a Palestinian girl growing up in the wake of the first Arab-Israeli war.
Mer-Khamis also founded the Freedom Theater, a drama and cultural center, in the Palestinian refugee camp.
"Rula and Julian were very shocked at this tragic news," a representative for the makers of "Miral" told the New York Post.