Israeli soldier Gilad Shalit has returned to Israel after being held in captivity in Gaza for five years.
Israel is releasing 1,027 prisoners in two stages in exchange for the handover of Mr Shalit and 477 Palestinian prisoners were freed this morning.
Mr Shalit was abducted in June 2006 by militants who tunnelled into Israel from Gaza and surprised his tank crew, killing two soldiers.
The 25-year-old told Egyptian television after his release this morning that he was in good health.
"I missed my family very much. I also missed my friends. I very much missed meeting ordinary people to talk to them about my experience."
Speaking in Hebrew through a translator, he was asked what he thought of the 5,000 or so Palestinians still in jail in Israel and said he would be happy if those prisoners were freed.
"I would be very happy if they were all released so they can return again to their families and their lands."
Mr Shalit was handed over by Hamas to Egyptian officials before being transferred to the border with Israel.
Israeli army spokesman Brigadier General Yoav Mordechai confirmed Mr Shalit's return to Israeli soil.
"Gilad has returned home," he said at the Kerem Shalom border crossing.
Mr Shalit was flown to Tel Nof air base in southern Israel where he was reunited with his family and met Israeli leaders.
200,000 celebrate in Gaza
Some of the freed Palestinian prisoners were taken to Egypt's Sinai peninsula and handed over to Egyptian officials for transfer to Gaza. Others were taken to the West Bank.
Some 40 prisoners are being sent into exile to Turkey, Qatar and Syria.
More than 200,000 people gathered in Gaza city for a mass rally to celebrate the return of the released prisoners.
Prime Minister Ismail Haniyeh is expected to address the rally as well as Yehia Sinwar, a senior leader with Hamas's armed wing - who was among those released this morning.
In Rafah in southern Gaza, thousands of excited family members gathered to welcome 296 newly-released prisoners home, many of whom could be seen wearing green Hamas sashes and wiping tears from their eyes.
Similar scenes of jubilation occurred across the West Bank, with many thousands of people packing into the city of Ramallah to welcome 117 detainees home, cheering and waving flags as they got off four buses outside the Muqataa presidential compound.
Another 550 Palestinians are to be released in a second stage of the Egyptian-brokered agreement, which is expected in about two months.
Among the prisoners released in the swap deal are Walid Anjas, who received 36 life sentences over a 2002 attack on a Jerusalem bar that killed 11 Israelis, and Nasr Yateyma, who was convicted of planning the 2002 Passover bombing, which killed 29.
Another man released is Nael Barghuti from Ramallah, he was arrested in April 1978 and convicted of involvement in the death of an Israeli soldier.
He was listed by the Guinness Book of Records as the world's longest-serving political prisoner.
UN welcomes exchange deal
The deal received a green light from Israel's Supreme Court late last night after it rejected petitions from the public to prevent the mass release of prisoners, many serving life sentences.
The repatriation of captured soldiers, alive or dead, has long been an emotionally charged issue for Israelis.
Meanwhile, UN Secretary-General Ban Ki-moon said that he expected the prisoner exchange to boost prospects for the wider peace process.
"With this release, it will have a far-reaching positive impact to the stalled Middle East peace process," Mr Ban said.
He added: "I am very encouraged by the prisoner exchange today after many, many years of negotiation.
"The United Nations has been calling for (an end to) the unacceptable detention of Gilad Shalit and also the release of all Palestinians whose human rights have been abused all the time."
