Palestinians took control of the Gaza Strip today amid scenes of jubilation after Israel formally its four decade occupation.
Palestinian security personnel took over abandoned Jewish settlements and raised their flag over land captured by Israel in a war with Egypt 38 years ago.
Arab leaders welcomed the pullout but called for Israel to follow through by withdrawing from all Palestinian territories.
Earlier, it was reported that Egyptian guards shot dead a Palestinian man at the Egyptian border with the Gaza Strip.
Thousands of Palestinians and Egyptians have been flooding across the border hours after Israel completed its withdrawal from the Gaza Strip.
The withdrawal has raised hopes of progress in the Middle East peace process.
However, the radical Islamic group, Hamas, has said it will continue its armed struggle against Israel until all Palestinian land is liberated.
Despite the radical group's pledge, however, the Palestinian leader, Mahmoud Abbas, has refused to try to disarm Hamas because he believes it would trigger a civil war.
Mr Abbas says that Hamas, which has announced that it will take part in next year's general elections, will become a party like any other after the polls and will no longer have a need for arms.
The Palestinian ministry has said no armed groups would be tolerated in the Gaza Strip following Israel's departure, which was completed early this morning when the last troops left.
However, Israel still retains control of the area’s land borders, air space and territorial waters.
Palestinians fired celebratory shots into the air and raised their flag in former Jewish settlements as convoys of Israeli tanks rolled across the border, marking the historic end of a military presence embroiled in bloodshed.
After sunrise, the flags of militant factions Hamas and Islamic Jihad could also be seen fluttering over buildings left standing in Neve Dekalim, including the municipal headquarters and synagogue.
Thousands of Palestinian security forces moved into the settlements overnight, dancing and singing patriotic songs within the settlements built on land that Israel captured in war 38 years ago.
'We are seeing soldiers, tanks and Israeli military vehicles leaving our land and the Israeli flag lowered and replaced for always by the Palestinian flag,' said Mr Abbas, describing it as a 'day of joy'.
He added: 'Much work still needs to be done but nothing can take away from this victory.'
'End of an era' - Kochavi
Israel's Gaza divisional commander General Avi Kochavi was the last to go, exiting through the metal gates on the Kissufim crossing where military bulldozers dug up mounds of earth to block the entrance.
'The mission is completed and an era is over,' Kochavi said in a brief speech at the crossing. 'From now on, the responsibility for what happens in the Gaza Strip lies in the hands of the Palestinian Authority.'
Palestinian militants fired a rocket on the southern Israeli town of Sderot during the pullout, causing no injuries or damage.
Commander of the pullout, Dan Harel, said the attack violated security promises made ahead of the withdrawal and warned that it was now up to the Palestinians to prevent militant attacks.
The troop withdrawal follows the clearance of all settlers from Gaza three weeks ago, a political gamble by rightwing Prime Minister Ariel Sharon that marked the first time Israel has removed Jews from occupied Palestinian land.
The operation took place under cover of darkness, much like Israel's pullout from south Lebanon more than five years ago but in sharp contrast to the settlers being dragged kicking and screaming from homes and synagogues last month.
