The incident happened in Kalandiya, north of Jerusalem, Wednesday where there have been daily protests against the construction of the fence, Ynetnews.com reported.
The Israeli Web site said police used crowd dispersal means to stop the bulldozer, while demonstrators told reporters they were able to chase the driver away themselves. The incident prompted Israeli soldiers to break up the demonstration, Ynetnews.com said.
No injuries were reported. The driver of the bulldozer was not identified.
Earlier in the day, 150 Palestinian, Israeli and foreign peace activists clashed with security forces in the West Bank town of Naalin, near the city of Ramallah, to protest of the construction of the security fence. Israeli military officials said the protesters hurled stones at the troops. Palestinian sources said five protesters were injured in the confrontation.