Jewish settlers remaining in the Gaza Strip and parts of the West Bank have just a few hours left to evacuate their homes before facing forcible eviction.
Protesters tried to persuade soldiers to disobey orders
Israeli soldiers will move in to clear all settlements in Gaza and four in the West Bank if the settlers have not left by midnight Tuesday (2100 GMT).
There were emotional scenes as the pullout got under way on Monday.
In a TV address, Israeli leader Ariel Sharon said it was a painful step, but essential for the nation's future.
"We cannot hold onto Gaza forever. More than a million Palestinians live there and they double their number with each generation," he said.
"They live in uniquely crowded conditions in refugee camps, in poverty and despair, in hotbeds of rising hatred with no hope on the horizon."
He admitted the withdrawal was a risky manoeuvre, but professed his belief that it was undoubtedly the best way to ensure security and called on all Israelis to trust him.
Scenes of hysteria
And he gave a stark warning to Palestinians on how Israel would respond if they fail to crack down on extremist groups.
"The world is waiting for the Palestinian response... To an outstretched hand we shall respond with an olive branch, but we shall fight fire with the harshest fire ever," he said.
Mr Sharon was speaking at the end of a day of highly charged scenes as Israeli troops handed out eviction notices in the Gaza Strip.
Many of the unarmed soldiers were confronted by protesters calling on them to disobey their orders. Some of the soldiers, as well as protesters, were in tears.
Although most resistance was non-violent, riots broke out in the northern Gaza settlement of Alei Sinai amid rumours that the settlers could be evacuated from early Tuesday morning.
An old car with smashed windows was brought to the settlement's front gate, and rubber tyres set alight, to stop soldiers from entering, the BBC's Katya Adler says.
The residents had found out they could not move together as a community - as they had originally been told - sparking fury and hysteria, our correspondent adds.
Some of the settlers in Gaza spoke of feeling betrayed by the Israeli government's decision to evict them.
"I think that all this process is immoral, all this plan is just a disaster for us and when my government said it would find a solution for every settler, we find it a lie, because we are more than 600 families with no solution," said Debbie Rosen, one of the residents at the largest settlement in Gaza, Neve Dekalim.
"We don't know where to go. We don't know where our kids are going to school and it is two weeks before 1 September and there's nothing prepared for us."
Around half of Gaza's 8,500 settlers have already left. But those remaining have been joined by about 5,000 hardliners from Israel and the West Bank.
This is the first time that Israel has agreed to dismantle settlements built on Palestinian land seized in the Six-Day War in 1967.
Palestinian leader Mahmoud Abbas hailed the move as "historic" but said Israel should also pull out of the West Bank.
Hundreds of Palestinians marched through Gaza City to mark the start of the withdrawal and others headed for mosques to give thanks in a mass prayer meeting called by the militant group, Hamas.