A three-day ceasefire between Israel and Hamas appears to be holding as Israeli ground troops are withdrawn to "defensive positions" on the border.
Tuesday saw the longest lull in fighting since the almost four-week conflict began, with both sides seemingly observing the terms of an Egyptian-brokered truce.
Some of the 440,000 Palestinians displaced by the fighting were able to make the trek from UN-run shelters back home to survey the damage.
Shops and local businesses also gradually reopened as confidence grew that the ceasefire was holding.
The truce began at 8am local time (6am UK time) and follows six previous ceasefire attempts which have all been marked by allegations from both sides of continued attacks.
But aerial assaults were put on hold as Israel's ground offensive, aimed at destroying Hamas' network of cross-border tunnels, also drew to a close.
Israel says its troops and tanks were redeployed in "defensive positions" near the border.
Israeli army spokesman Lieutenant Colonel Peter Lerner said the move came after the last of 32 tunnels located inside Gaza was destroyed overnight.
"Today we completed the removal of this threat," he said.
There was a rapid exchange of fire in the minutes leading up to the truce, with Hamas militants launching rockets over the border and Israeli warplanes carrying out airstrikes.
Hamas claimed the rockets were launched in retaliation for Israel's "massacres".
Israel's anti-missile system shot down one rocket over Jerusalem, while another struck a house in a town near Bethlehem.
Israeli warplanes also carried out at least five airstrikes before the ceasefire took hold and the skies fell silent.
Tuesday's ceasefire deal followed lengthy negotiations in Cairo attended by a Palestinian delegation, but shunned by Israel.
An Israeli delegation has now arrived in Egypt to join indirect talks aimed at thrashing out a more lasting deal.
Hamas has demanded Israel withdraw from Gaza and end a blockade of the territory.
It has also called for its prisoners to be released and for international assistance in rebuilding Gaza.
Bassam Salhi, a member of the Palestinian delegation, admitted brokering a peace deal which satisfies both sides will prove difficult.
"It's going to be tough negotiations because Israel has demands too," he said.
More than 20 Palestinians were killed on Monday , including an eight-year-old girl who died in an Israeli airstrike on a refugee camp in Gaza City, just minutes into a seven-hour partial truce.
Jerusalem, meanwhile, was rocked by two attacks which appeared to be in retaliation for violence in the Gaza Strip.
The driver of a digger was shot dead after hitting a bus, killing one person, in what Israel described as a "terrorist attack".
Several hours later a gunman shot and wounded an Israeli soldier before escaping on a motorbike.
Israel launched its military operation on July 8 with the stated intention of ending "persistent" Hamas rocket attacks.
It subsequently launched a ground offensive aimed at destroying cross-border Hamas tunnels, an objective Israel says it has now achieved.
More than 1,880 Palestinians and 64 Israeli soldiers have lost their lives since the conflict began. Two Israeli civilians and a Thai labourer working in Israel have also died.
Meanwhile, Foreign Office Minister Baroness Warsi has resigned saying she can no longer support the UK Government's stance on Gaza.
Lady Warsi, who is also Minister for Faith and Communities, announced her departure on Twitter, where she has been increasingly vocal in her condemnation of Israel's actions.