A Palestinian boy who was seriously wounded in a firebomb attack last year that killed the rest of his family has been released from an Israeli hospital and returned home to the West Bank.

Ahmad Dawabsheh was discharged from the hospital on Friday and greeted with a festive welcome in his village of Duma.

Suspected Jewish settlers hurled firebombs into the family's home last July, killing his brother, 18-month-old Ali Dawabsheh. His parents later died of their wounds. Four-year-old Ahmad survived but his burns needed a year of treatment to heal.

The attack and the drawn-out investigation helped fuel months of Israeli-Palestinian violence.

Hospital director Asher Barzilai says Ahmad arrived with little chance of surviving but that the staff were now pleased to see him go home healthy.