Hundreds of officers marched into the outpost near Ramallah on Wednesday to carry out the removal of dozens of hard-line Jewish settlers, after an eviction notice was given to residents a day earlier.
Police said once residents have been evacuated, their homes will be demolished.
The Amona outpost, some 20 kilometers (12 miles) north of Jerusalem, has been the subject of an eight-year legal tussle over whether the settlement homes had been built on private Palestinian land.
Homes to be bulldozed
A Supreme Court ruling, which sided with the Palestinian claimants, ended months of attempts by government hardliners to legalize the outpost, instead ordering it to be evacuated by February 8.
But as police arrived, dozens of protesters waited at the entrance, blocking access to roads, setting tires on fire and pouring oil in the streets, local media reported.
Police said they had been in dialogue with the residents throughout the night in order to ensure "a peaceful eviction."
But some locals and protesters refused to leave, vowing not to resort to violence against the police.
"We won't be going, they'll have to take us," Amona resident Rivka Lafair, 19, told the Agence France-Presse news agency.
Around 600,000 Israelis currently live in more than 200 settlements in the West Bank and East Jerusalem.
The settlements are considered by most countries to be a major obstacle to a peace agreement with the Palestinians. But Israel disagrees, citing historical and political links to the land - which the Palestinians also assert - as well as security interests.
The Obama administration had pressured Israel tofreeze the building of additional settlements, over fears they could derail hopes of a negotiated two-state solution.
But new US President Donald Trump has pledged strong support for Israel, and his aides are more sympathetic to the settlement plan.
The change of US administration has allowed the Israeli government under Benjamin Netanyahu to take advantage. Late on Tuesday, the prime minister announced plans tobuild 3,000 new West Bank settlement homes, the third such declaration since Trump took office on January 20.
EU foreign policy chief Federica Mogherini warned Wednesday that the movie went "directly against" EU policy and risked making a two-state solution impossible. The announcement "marks a very worrying trend, posing a direct challenge to the prospects of a viable two-state solution," Mogherini said.
More than half of the proposed settlement homes are set for immediate construction, the Israeli newspaper Haaretz reported.
mm, nm/rt (AFP, AP, dpa)