The soldiers were making their rounds in the city of Hebron when they entered a dance hall and joined dozens of Palestinian men dancing to South Korean rapper Psy's hit Gangnam Style.
The Israeli military said on Thursday that it considers the incident serious, adding "the soldiers exposed themselves to unnecessary danger and were disciplined accordingly," without elaborating.
Footage aired on Israeli Channel 2 TV shows the solders in uniform, flak jackets and carrying guns.
One was shown hoisted on the shoulders of Palestinian dancers. Other soldiers joined hands and grooved with the partygoers. The channel said the incident occurred on Monday.
Hebron has been a flashpoint of violence between Israelis and Palestinians for decades.
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