Israeli Arabs near Tel Aviv, on May 14, 2011, mark "Nakba Day," when Arabs were displaced from their homes.
Israeli police were trying to determine whether the vicims were targeted.
The incident comes as Palestinians mark "Nakba Day," the day when more than 700,000 Arabs were displaced from their homes during fighting after the creation of Israel in 1948.
Israelis beefed up security on the streets as both sides braced for violence leading into "Nakba Day."
Israeli police were questioning the driver, who witnesses said crashed the truck into cars and pedestrians on a crowded street, authorities said.
The driver was identified as a man in his 20s from the Arab village of Kfar Qassem about 20 kilometers east of Tel Aviv, police said.
A 40-year-old man was killed when the truck slammed into his car, said Israel Ambulance spokesman Zaki Heller.
Of the 16 injured, all but one person suffered minor injuries, he said. One person suffered moderate injuries, Heller said.
Palestinians and Israeli security forces clashed Sunday near Erez crossing, a pedestrian and cargo crossing that links Israel and the Gaza Strip. One person was killed and more than 20 were injured in the clashes after Israeli solders opened fire during a violent protest marking "Nakba Day," said Palestinian security and medical sources.
There was no immediate response to the allegation from Israeli officials.
A day earlier, a funeral procession in East Jerusalem for a Palestinian teenager who died from a gunshot wound turned violent when participants clashed with Israeli police.
Milady Ayahs, 17, was participating in a protest Friday when Israeli police shot him, his family said. He died early Saturday, according to police and his family.
Israeli police were investigating the allegation, though a police spokesman said initial reports were that no live ammunition was used by police who responded to the protests. The spokesman said Ayahs was taken to the hospital with what appeared to be a gunshot wound to the shoulder.
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