Israeli forces have handed the West Bank city of Jericho over to Palestinian security control.
The handover had been delayed several times by differences over the number of checkpoints Israel would dismantle on roads leading to the city.
The Israeli Prime Minister, Ariel Sharon, has also pledged to move troops away from four other West Bank cities, including Ramallah and Bethlehem.
The handovers are part of confidence-building gestures with the Palestinian leader, Mahmoud Abbas.
Meanwhile in Cairo, Mr Abbas will continue talks with a number of Palestinian militant groups in Cairo today in an effort to reach agreement on a formal ceasefire with Israel.
Mr Abbas said the current informal truce had brought results but urged Israel not to delay in implementing its commitments.
The militant factions have said any cessation would depend on what Israel had to offer.