Israeli human rights group B’Tselem said the child should not have been detained because the age of criminal responsibility in Israel was 12.
Video showed the boy taken into an army jeep accompanied by a Palestinian man.
The army said the boy had endangered passers-by and that soldiers only accompanied him to his parents.
B’Tselem said Israeli soldiers detained Wadi Maswadeh after he threw a stone near a checkpoint on Tuesday.
The group’s video showed how the boy was led into the jeep, before being taken to his parents’ house.
B’Tselem said the soldiers later also picked up Wadi’s father and took them both to an army base, holding them there for about 30 minutes. The father was blindfolded – a military official was quoted by the Associated Press as saying this was because he was in a military base. He was also handcuffed.
The two were eventually handed over to Palestinian police and released shortly afterwards.
B’Tselem said it had formally complained to the Israeli authorities over what it called a “grave incident”.
It said Israel was a signatory to the Convention on the Rights of the Child, which stated that minors must be protected in criminal proceedings.
In response, the Israeli army said Wadi Maswadeh had been throwing rocks towards the street, endangering passers-by.