Sa'ad Dawabsheh, the father of Ali, died early on Saturday, his brother told Al Jazeera.
The 32-year-old died in Soroka hospital, where he had been treated for second-degree burns to more than 80 percent of his body.
Al Jazeera's Imtiaz Tyab, reporting from West Jerusalem, said Sa'ad's wife, Riham, and four-year-old son Ahmad remain in critical condition, in Tel Hashomer hospital.
"His mother and brother also remain at the hospital. They both remain in very serious condition.
"In fact the mother's condition for several days was thought to be worse than the father's so the fact that he succumbed to his wounds raises alot of concern about her," Tyab said.
Early last Saturday morning, a firebomb was thrown into the family's bedroom in a suspected settler arson attack, setting the house alight.
A funeral is expected to be held later on Saturday in Duma, where last week's attack took place.
The Palestine Liberation Organization has said it holds Israel's government "fully responsible" for the death of the 18-month-old baby and will lodge a complaint with the International Criminal Court (ICC).
The attack was roundly condemned around the world.
According to the UN, at least 120 attacks by Israeli settlers have been documented in the occupied West Bank since the beginning of 2015.
A recent report by Yesh Din, an Israeli human rights organisation, showed that more than 92.6 percent of complaints Palestinians lodge with the Israeli police go without charges being filed.
Source: Al Jazeera