The Egypt brokered ceasefire began early this morning, ending the 11-day fighting.
The Security Cabinet of Israel had approved a ceasefire in the Gaza Strip, bringing a potentially tenuous halt to the most aggressive fight in decades.
The Cabinet said it had voted unanimously in favour of a mutual and unconditional truce proposed by mediator Egypt.
The development came a day after US President Joe Biden urged Israeli Prime Minister Benjamin Netanyahu to seek de-escalation, and amid mediation bids by Egypt, Qatar and the United Nations.
A Hamas official told media that the ceasefire would be mutual and simultaneous.
Palestinians poured onto the streets of Gaza soon after the truce began.
Both Israel and Hamas have claimed victory in the conflict.
US President Joe Biden later hailed the cease-fire saying he sees a genuine opportunity toward the larger goal of building a lasting peace.
He credited the Egyptian government with playing a crucial role in brokering the cease-fire.
Egypt said it will send two delegations to monitor the ceasefire.
Mr Benjamin Netanyahu’s office said Israel accepted the Egyptian proposal after a late-night meeting of his Security Cabinet.
Hamas quickly followed suit and said it would honor the deal.
Since the fighting began on May 10, health officials in Gaza say 240 Palestinians, including 65 children and 39 women, have been killed and more than 1,900 wounded in aerial bombardments.
Israel says it has killed at least 160 combatants in Gaza.
Authorities put the death count in Israel at 12, with hundreds of people treated for injuries in rocket attacks that have caused panic and sent people rushing into shelters.
Last week, the new episode of Israeli-Palestinian conflict broke out after the civil unrest in East Jerusalem, prompting hostilities on the border of Israel and the Gaza Strip.