The order initially imposes financial sanctions and visa bans against four individuals, and US officials said they were evaluating whether to punish others involved in attacks that have intensified during the IsraelHamas war.
According to at least one report before the executive order, options included the potential to sanction officials.
Palestinian authorities say some Palestinians have been killed, and rights groups say settlers have torched cars and attacked several small Bedouin communities, forcing evacuations.
In the order, Biden said that extremist settler violence in the West Bank had "reached intolerable levels and constitutes a serious threat to the peace, security and stability of the West Bank and Gaza, Israel, and the broader Middle East region".
He said: "These actions undermine the foreign policy objectives of the US, including the viability of a two-state solution and ensuring Israelis and Palestinians can attain equal measures of security, prosperity, and freedom.
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