A ceasefire between Hamas and Israel has come into effect after eight days of violence that has left more than 140 Palestinians and five Israelis dead.
Egyptian foreign minister Mohamed Kamel Amr announced the breakthrough at a news conference in Cairo. The truce began at 7pm (UK time).
There was a last spasm of Palestinian rocket attacks and Israeli airstrikes just minutes before the deal came into effect.
After 7pm, people took to the streets of Gaza City to celebrate, with gunmen firing into the air and others setting off fireworks.
But the mood was more subdued in Israel. Speaking from Tel Aviv, Sky News defence correspondent David Bowden said: "The people I've been speaking to say: 'We will believe it when we see it. We've been here before and it eventually breaks down'."
He said in the city of Sderot - near the border between Israel and the Gaza Strip - there were reports of demonstrations against the ceasefire, with residents expressing disappointment at Israel's decision not to send ground troops across the border.
US Secretary of State Hillary Clinton has described the ceasefire agreement as "a critical moment for the region".
"Egypt's new government is assuming the responsibility and leadership that has long made this country a cornerstone of regional stability and peace," she said.
"The United States welcomes the agreement today for a ceasefire in Gaza. For it to hold the rocket attacks must end, a broader calm returned.
"The people of this region deserve the chance to live free from fear and violence, and today's agreement is step in the right direction that we should build on.
"Now we have to focus on reaching a durable outcome that promotes regional stability and advances the security, dignity and legitimate aspirations of Palestinians and Israelis alike."
Mrs Clinton pledged the US would continue to work with Egypt to consolidate the truce in the days ahead by improving conditions for the people of Gaza and providing security for Israelis.
According to reports, Israel and Hamas have agreed to an immediate halt in the violence. Israel will end its policy of assassinating top Hamas officials, while Hamas has promised to halt all rocket fire by the many militant groups operating in the Gaza Strip.
After a brief cooling off period, Israel has also pledged to ease its blockade of Gaza, though there have been no firm assurances on how that will be done. Israel has maintained the blockade since Hamas seized power of Gaza in 2007, though it has gradually lifted many of the restrictions.
UN secretary general Ban Ki-moon welcomed the truce, but said some details of the deal were yet to be agreed.
"We are encouraged and relieved that they have reached this ceasefire," Mr Ban said.
"There are still many details to be solidified for a durable ceasefire. I hope they will finalise these details as soon possible."
Moussa Abu Marzouk, a top Hamas official, said on his Facebook page that talks on a new border arrangement would begin after the 24-hour cooling off period.
The deal follows talks between Mr Amr, Mrs Clinton and Egyptian President Mohamed Morsi, who also sat down with Mr Ban separately to discuss the crisis.
Mr Ban also met with Palestinian President Mahmoud Abbas to discuss the crisis.
Earlier, a bus bombing in the Israeli city of Tel Aviv that left at least 21 people wounded had threatened to derail the negotiations.
Moments after the deal was announced, an air-raid siren signalled a rocket attack in southern Israel, while an airstrike could be heard in Gaza.
Palestinian militants fired five rockets into the southern Israeli city of Beersheba. One rocket hit a house inside the city, police said. No injuries were reported.
In the last-minute burst of fire, Palestinian militants fired five rockets into the southern Israeli city of Beersheba. One rocket hit a house inside the city, police said. No injuries were reported.
Immediately after the announcement, Israeli Prime Minister Benjamin Netanyahu said he had agreed to "give a chance" to the Egyptian-brokered agreement after speaking to US President Barack Obama.
A statement from his office said Mr Netanyahu "agreed to his recommendation to give a chance to an Egyptian proposal for a ceasefire and thereby give an opportunity for the stabilisation of the situation and a calming of it".
Mr Obama welcomed the move and said the United States would use the opportunity to intensify efforts to help Israel address its security needs, particularly the smuggling of weapons and explosives into Gaza, the White House said.
The US President also said he would seek more money for the Iron Dome defence system that has protected Israel from rocket attacks.