Palestinians in Gaza city erupted into whistles and cheers as a ceasefire with Israel came into effect, while in Jerusalem, fireworks lit up the sky to mark an end to 11 days of war.
Gazans poured out on to the streets and celebratory gunfire could be heard when the 2am truce came into effect, announced hours earlier after Egyptian mediation.
People waved Palestinian flags and gathered in the streets beside the rubble of buildings flattened by Israeli air strikes.
At least 232 Gazans were killed in the fighting and 1,900 wounded, the Health Ministry said.
As the truce initially held, with no reports of Israeli strikes or rockets fired from Gaza, Palestinians set off fireworks in occupied East Jerusalem.
Drivers honked their horns as they drove in a convoy around the Sheikh Jarrah neighbourhood, which has become a centre of Palestinian protest in the city.
Celebrations were also reported in Ramallah and elsewhere in the occupied West Bank.
The atmosphere in Gaza early on Friday was akin to festivities marking the Eid holiday at the end of Ramadan, which occurred last week when the enclave was under intense fire.
In the run-up to the truce, both sides continued firing and said that an end to hostilities would depend on their foe sticking to the agreement.
“I welcome the ceasefire between Gaza and Israel. I extend my deepest condolences to the victims of the violence and their loved ones,” UN peace envoy Tor Wennesland said.
“The work of building Palestine can start."
In Israel, rockets killed 10 people and hit buildings and vehicles, but in Gaza the shelling devastated infrastructure.
More than 250 buildings were destroyed, while 46 schools and six hospitals were damaged, the UN said.
The road network was also affected and aid agencies have made urgent appeals for fuel and medicine.
By the time the ceasefire came into effect, more than 90,000 Gazans had been displaced by the conflict, according to the UN.