Huge crowds gathered for the funeral in the West Bank of 32-year-old Saad Dawabsha.
The young father died of his injuries following an arson attack on his home which was blamed on Jewish settlers.
Mr Dawabsha had second-degree burns to most of his body and died in hospital.
His son Ali, who was 18 months old, died in the attack in the West Bank village of Duma on July 31st.
His wife and a second son aged four were also seriously injured and remain in a critical condition in hospital.
The family home was firebombed during the night by suspected Jewish militants. Slogans in Hebrew were daubed on the walls, including one spelling “revenge”.
PM Netanyahu spoke with PA Chairman Abbas and said everyone in Israel was shocked by the reprehensible terrorism against the Dawabsha family— PM of Israel (@IsraeliPM) 31 Juillet 2015
Israeli Prime Minister Benjamin Netanyahu described it as an act of terrorism and has vowed to catch those responsible.