Palestinian leader Mahmoud Abbas has presided over a ceremony marking the official re-opening of the border between the Gaza Strip and Egypt.
The banner reads: "Rafah crossing: Palestine's gateway to freedom"
Declaring the crossing at Rafah open, Mr Abbas said it was "a dream come true" for Gaza's 1.3 million residents.
For the first time, Palestinians will control a gateway to the outside world that is vital for Gaza's economy.
Israel passed control of the border to the Palestinian Authority - under the supervision of EU monitors.
The crossing will actually be opened to Palestinians coming from and going to Egypt on Saturday.
GAZA CROSSINGS DEAL
Palestinians in charge of crossing, but authority limited
EU monitors have power to detain individuals and vehicles
Israel can watch crossing on television screens
Israel can object to particular travellers, but cannot veto passage
Imports from Egypt must go via Israeli checkpoint at Kerem Shalom
Palestinian bus convoys between Gaza and West Bank from December, and lorry convoys from January
Gaza sea port to be constructed
The EU's envoy to the Middle East, Marc Otte said the opening would mean an "enormous step forward toward the freedom of the Palestinian people".
Gaza has no sea port and the Israel has not agreed to allow the international airport to re-open, so the Rafah border is Gaza's gateway to the outside world.
BBC Gaza correspondent Alan Johnston says Palestinians have always hated having to pass through Israeli hands at the frontier, where they were often subjected to delays and questioning.
Israel closed the Rafah crossing on 7 September shortly after withdrawing from Gaza, citing concerns that it would be used to smuggle weapons and militants from Egypt into the Palestinian Territories. Since then, the crossing has barely been open at all.
The Israelis worry that Islamic militants might infiltrate Gaza and threaten Israel. They have insisted on the right to monitor the crossing point on television screens from a base a few kilometres away.
Earlier this month, US Secretary of State Condoleezza Rice brokered a deal between Israel and Egypt allowing key border crossings into the Gaza Strip to be re-opened.
Under the agreement, there are limits to Palestinian authority at the border.
Palestinians will control the border, but EU monitors will have the authority to detain vehicles or individuals if they feel they have not been properly checked.
Israeli security officials will watch all movements at the crossing on TV screens, but they will not have veto power over individuals moving through.
While exports will be supervised by the Israelis, the flow of goods into Gaza will remain entirely under its control at the border crossing at Kerem Shalom.
Palestinians will be able to travel in bus convoys between Gaza and the West Bank from December, and in lorry convoys a month after that.
There are plans for a sea port, although the Israelis have refused to allow the international airport to re-open.
On Wednesday, the head of the team of EU monitors, Italian military police General Pietro Pistolese, said the crossing would only be open for four hours a day until the number of monitors increases from 20 to between 50 and 70.
European officials have described their role as one of the most important missions the EU has ever undertaken.
It is the first time the EU has been so directly involved in efforts to ease the Israeli-Palestinian conflict.
As the Europeans are also expecting to play a role at the start of next year in training the Palestinian police force, there is a sense in Brussels that this is a mission that cannot be allowed to fail, correspondents say.