Israeli settlers torched nearly 20 cars early Monday in the occupied West Bank city of Al-Bireh near Ramallah, according to the Palestinian civil defence and an Israeli security source.
An AFP journalist saw several cars completely charred, and the blackened facade of the five-storey building outside which they were parked.
An alert rang "at 3:30am (0130 GMT) signalling that settlers entered the area and committed acts of vandalism", said Rami Omar, head of the local civil defence office.
An Israeli security official told AFP notification of the incident came at 4:00 am and soldiers were sent who arrived on site after the settlers had gone.
The official, who was not authorised to speak publicly on the matter, said 19 vehicles had been burned by settlers.
Israeli police, soldiers and Shin Bet security agency officers collected evidence in Al-Bireh for the investigation, the official added.
Israeli authorities did not yet know where the settlers came from and what their motives were.
Ihab al-Zabin, a resident of the damaged building, told AFP he saw the arsonists run away towards the nearby Israeli settlement of Beit El.
Zabin said he saw around 10 people he identified as settlers "pouring liquids on vehicles in front of the building and then setting them on fire".
"I yelled from my apartment, and at that moment they ran away", he said. "When I went down with my neighbours to put out the fire, settlers shot towards us."
Abdullah Abu Rahmah from the Palestinian Commission against Settlements told AFP that the attackers belong to a group of arsonists who have attacked other nearby villages in the past.
Laila Ghannam, governor of Ramallah and Al-Bireh, told journalists at the scene "there could have been a massacre in this building", which residents say housed more than 60 people.
"Attacks are increasing because of impunity" for attackers, she said.
Violence in the West Bank has soared since Hamas's unprecedented attack on Israel on October 7 last year triggered war in the Gaza Strip.
The UN's office for the coordination of humanitarian affairs (OCHA) said in August: "Between 1 and 28 October, OCHA documented nearly 270 settler-related incidents affecting Palestinians and their property."
Some 490,000 settlers live in settlements considered illegal under international law in the West Bank, which Israel has occupied since 1967.
The territory is home to three million Palestinians.