Police and Israeli Defense Forces had searched for the woman, identified to NBC News as Christine Logan, all night fearing she was kidnapped in a nationalistically motivated incident.
The kidnapping report came from the victim's friend and hiking companion, Kaye Susan Wilson, who was also found bound and stabbed by two families hiking near Moshav Mata forest, southwest of Jerusalem but inside the Green Line border with Arab nations, said the Jerusalem Post and Haaretz newspapers.
Wilson, 46, a British immigrant who lives in a Jerusalem-area community and is a tour guide, told police that she and her friend were assaulted by two Arab men while hiking at Khirbet Hanut, an archaeological site.
Dr. Yuval Weiss, director of Hadassah Hospital in Jerusalem, told Army Radio he expected Wilson would be released within several days.
Police said Wilson told them she managed to escape her assailants by pretending she was dead. Afterward, she made it to a parking area where other people alerted authorities.
Logan's body was found on the road between Mata and Beit Shemesh.
A police manhunt for the missing woman and her attackers included hundreds of Israel Defense Force members, Border Police troops and the Shin Bet security service, Haaretz said.
Authorities were investigating for possible terror cells in the area, Haaretz said.
Wilson "described being attacked, tied up and stabbed by two Arab men,” police spokesman Micky Rosenfeld told the Post.
“She did not know who they were, or what the reason for the attack was. We are examining whether this is a nationalistic stabbing, but other directions are being looked at as well,” Rosenfeld said.