The withdrawal took place after the Israeli government approved the first phase of the ceasefire after a long negotiation. At 11 am on Friday, Swedish time, Israel announced that a ceasefire is now in effect in Gaza.
Thousands of Palestinians are now heading north, according to Israeli media. Pictures show a steady stream of people walking along the Gaza coast.
The optimism that all parties have radiated seems to be justified for once, says Middle East expert Anders Persson minutes after the Israeli announcement.
Last night's Israeli withdrawal from parts of Gaza City and Khan Yunis took place under cover of artillery fire and air strikes, according to Israeli media. After the withdrawal, Israel still controls more than half of the Gaza Strip.
Threats from Hamas
According to the agreement, 20 living hostages and the remains of 28 more will be released by lunchtime on Monday. Thereafter, around 2,000 Palestinians imprisoned by Israel will be released. However, there is disagreement between Israel and Hamas about which names should be included, reports The Times of Israel.
Israel's approval only applies to the first phase of the US peace plan. There are still many uncertainties surrounding the later phases of the agreement.
These are major and difficult issues, such as the disarmament of Hamas and how Gaza will be governed, says Anders Persson.
Shortly after the ceasefire was announced, Netanyahu spoke to the Israeli people - and threatened to resume arms if Hamas does not agree to disarm and Gaza is not demilitarized.
If this is achieved in a simple way, fine. If not, it will be achieved the hard way.
American force
Trump will arrive in Israel on Monday, according to Israeli Keshet 12, among other things to speak in the Israeli parliament, the Knesset.
According to sources for the news agency AFP, the US will initially send a force of around 200 people to monitor a ceasefire between Israel and the terrorist-stamped Hamas. Personnel from, among other things, the mediating countries Egypt, Qatar, and Turkey are also expected to participate in the force, as well as from France.
Over time, Trump's 20-point plan for peace means that Israel will gradually withdraw further from Gaza, while Hamas is disarmed and replaced by a technocratic government.
Corrected: In an earlier version, the wrong location was stated for the Israeli negotiations last night.
