Palestinian police are taking control of northern and central parts of the Gaza Strip, after a crucial Israeli troop withdrawal.
Gaza's main highway had been closed for more than two years
The Israeli army removed the main checkpoints on the main north-south highway, allowing free movement along it for the first time in more than two years.
The two sides are discussing an Israeli withdrawal from the West Bank - as required by the US-backed peace plan known as the roadmap - after three main groups of Palestinian militants declared a ceasefire.
However, in fresh violence on Monday, a man was killed in the northern West Bank.
The al-Aqsa Martyrs' Brigades - linked to one of the groups that supported the truce - said it had carried out the attack.
Palestinian cabinet minister Yasser Abed Rabbo welcomed the Israeli withdrawal from Gaza.
"Ending the [Israeli] occupation is the main goal of the Palestinian people," he told the BBC.
Officials on both sides held further talks on Monday to arrange an Israeli withdrawal for the West Bank.
Palestinian security officials said Israel had agreed to withdraw from Bethlehem on Wednesday.
Israeli Prime Minister Ariel Sharon will meet his Palestinian counterpart Mahmoud Abbas, widely known as Abu Mazen, on Tuesday, to discuss further implementation of the roadmap, Israeli radio said.
The al-Aqsa Martyrs' Brigades, an offshoot of Yasser Arafat's Fatah movement, said it carried out Monday's attack on a car near the town of Jenin.
Although Fatah has agreed to the truce, the al-Aqsa Martyrs' Brigades has not.
ROADMAP MAIN POINTS
Phase 1 (to May 2003): End to violence against Israelis and Palestinians; Palestinian political reform; Israeli withdrawal and freeze on settlement expansion; Palestinian elections
Phase 2: (June-Dec 2003) Creation of an independent Palestinian state; international conference and international monitoring of compliance with roadmap
Phase 3 (2004-2005): Second international conference; permanent status agreement and end of conflict; agreement on final borders, Jerusalem, refugees and settlements; Arab states to agree to peace deals with Israel
Fatah joined the main militant groups, Hamas and Islamic Jihad, in declaring a suspension to attacks on Sunday, raising hopes of an end to 33 months of fighting between Israel and the Palestinians.
The breakthrough followed intense efforts by the United States administration in recent weeks to try to get both sides to press ahead with the peace plan.
Palestinian Authority police forces on Monday took over security responsibility for the Gaza Strip's main highway.
Only one Israeli checkpoint remains, outside the isolated Jewish settlement of Kfar Darom.
A bypass track was opened to allow Palestinian motorists to get around Kfar Darom without hindrance, Israeli officials say.
The BBC's David Chazan in Gaza says the pull-out has generated a lot of optimism, as many people on both sides are battle-weary.
However, our correspondent adds, the hopeful mood amongst Palestinians in Gaza is tinged with caution - they have seen many a peace plan come and go, only to be followed by a return to conflict.
Ali Zaaneen, a Palestinian whose farm near the northern town of Beit Hanoun was destroyed by Israeli troops, on Monday watched the arrival of the police convoy without excitement.
"The Israeli aggression has left no space in our heart for hope and joy," he told the Associated Press news agency.
"Now I am able to go every day to my farm, but I will find nothing to harvest and take to the market."