JENIN - Palestinian Authority police have arrested a former Al-Aqsa Martyrs' Brigades militant suspected of involvement in Monday's fatal shooting of half-Jewish, half-Arab actor and director Juliano Mer-Khamis outside the theater he founded in Jenin.

The suspect, a Jenin resident who shifted his allegiance to Hamas after serving a five-year term in an Israeli prison for security offenses, was one of several suspects the PA police arrested within hours of the shooting, but he is the only one still in custody. He has also served eight months in a Palestinian jail.

It remains unclear whether police are convinced the suspect shot Mer-Khamis - he says he didn't, unlike terror groups which often publicize their involvement in violent acts - and why the actor, who was raised in Israel and is the child of a Jewish mother and a Christian Arab father, was killed.

The investigation is complicated by the reluctance of possible witnesses to come forward.

"Everyone's saying 'I heard nothing, I saw nothing," said an officer in the Palestinian security service. "They're worried that they'll be questioned by the PA and that they'll have trouble."

Zakaria Zubeidi, a former Al-Aqsa Martyrs' Brigades commander who was granted amnesty by Israel and had been co-directing the Freedom Theatre with Mer-Khamis, said all signs point to a planned, professional hit.

"This was an organized action, not out of anger or rage over the theater's activities or because of a personal quarrel with Jule," Zubeidi told reporters in the theater yesterday. "This is something that was done deliberately by an organization or state. We will have no mercy on whoever harmed the man who led the Freedom Theatre. ... We will not forgive this."

But though Zubeidi did not specify which group he thinks may be behind the shooting, he said it looks like Mer-Khamis was killed by a Palestinian from Jenin.

After the shooting Monday, dozens of local residents gathered around the car of the man they knew as "Jule," who they said never hid his intention of exposing Palestinian children to theater and fomenting a cultural revolution.

The theater has been vandalized by Islamists repeatedly, and there have been two attempts to torch it.

Israel is leaving the investigation of Mer-Khamis' death to the Palestinian Authority, even though he has Israeli citizenship, Israeli security officials said yesterday.

The sources said the Shin Bet security service would be receiving regular updates from the Palestinian authorities, particularly since the PA has already begun investigating and since it does not appear that Mer-Khamis was killed because of his Israeli citizenship.

Friends of Mer-Khamis, who appears in Julian Schnabel's recent movie "Miral," about an orphaned Palestinian girl, dismiss the possibility that he may have been killed because of his Jewish heritage.

There has been unsubstantiated speculation that he may have been targeted for reasons related to financial debts or a romantic liaison.

Though he grew up in Israel, Mer-Khamis never referred to himself as an Israeli Arab, Khaled Abu al-Hijah, a board member at the theater, told the news agency AFP.

"He used to say: 'I am both Palestinian and Jewish. I cannot divide myself between my mother and my father.'"

Mer-Khamis was born in Nazareth and raised partly in Haifa but has been living in Jenin in recent years. He was killed at 4:40 P.M. on Monday, when a young man called in Arabic for him to stop his car as he was driving away from the Freedom Theatre with his 8-month-old son and a babysitter. The gunman fired seven bullets into Mer-Khamis' head and chest from close range, killing him on the spot.

The baby survived unscathed and the babysitter, Raida, who is originally from Bethlehem, was lightly wounded.

Raida said the gunman was not wearing a mask when he approached the car, but put one on as he was running away from the scene.

In being shot, Mer-Khamis appears to have become the first half-Jewish shahid, the Arabic word for martyr. Many photographs of him - in a V-for-victory pose - were pasted all over the theater announcing: "Juliano Mer-Khamis, Martyr for Freedom and Culture."

Friends who gathered at the theater yesterday say his death will leave a huge vacuum but that they will work together to try to keep the theater running.