Stevens, who was killed with three colleagues Tuesday in an attack on US institutions in Benghazi, had served years earlier as a political officer at the US consulate in Jerusalem.
"It's just tragic," said Hanan Ashrawi, a PLO leader and veteran negotiator with Israel. "It's very sad. I thought he was a person who was not just intelligent but also caring."
As a mediator, the Arabic-speaking envoy "understood the Palestinian situation well. He was very understanding and he listened; he didn't repeat talking points," Ashrawi said in an interview.
"He could have made a big difference in people's lives and, really, to America's standing and credibility. His loss is a loss not only to US foreign policy but also to its standing with other states."
Stevens and three other Americans died after gunmen attacked the US consulate and a safe house refuge in the eastern city of Benghazi on Tuesday night. The attackers were part of a mob blaming America for a film they said insulted the prophet Mohammad.
Demonstrators later attacked the US embassies in Yemen and Egypt in protests against the film, and American warships were moved closer to Libya.
Senior PLO negotiator Saeb Erekat blasted Stevens' murder as an "ugly act of terror."
"He was a really close friend of the family, and I am really shocked," Erekat told Ma'an. "He was murdered in a very ugly act of terror, and it's so despicable."
Erekat said he had personally communicated to US Secretary of State Hillary Clinton the Palestinian people's condolences.
"Such a good man, such a great loss. His heart was in the peace process, and I'm sure his heart was also in the building of Libya," Erekat said.
"Of course no one tolerates the discrediting of our prophet Mohammad, but what did Stevens have to do with it? That's really unacceptable," he said of the alleged motive.
Earlier Clinton said Washington had nothing to do with the video, which she called "disgusting and reprehensible".'Criminal attack'
In Ramallah, President Mahmoud Abbas offered his condolences to the White House upon learning of the killing, the Palestinian Authority's official news agency reported.
"On behalf of myself, personally, and all Palestinian people, we offer sincere condolences to the US president after the US ambassador in Libya was killed in a criminal attack," Abbas said.
Israeli officials also condemned the string of attacks against US diplomatic missions and said they were "evil terrorist attacks" against the West, a Foreign Ministry statement said.
In Tripoli late Thursday, Libyan deputy interior minister Wanis Sharif said authorities had made four arrests in the investigation so far.
"Four men are in custody and we are interrogating them because they are suspected of helping instigate the events at the US consulate," Sharif said.
He gave no more details.
President Barack Obama has vowed to bring to justice those responsible for the Benghazi attack, which US officials said may have been planned in advance. Reuters contributed to this report.
BETHLEHEM (Ma'an) -- Palestinian negotiators on Thursday remembered US ambassador Christopher Stevens as fair-minded and described his death in Libya as a major loss for American foreign policy.