Gaza's ruling Hamas group reported a cease-fire deal had been reached to end an escalation in violence, as the Israeli military lifted protective restrictions on residents in southern Israel on Monday.
Israeli airstrikes killed at least 25 Palestinians, including two pregnant women and two infants, and injured more than 100 others since Saturday.
The Islamic Jihad group confirmed that a "mutual and concurrent" truce had been brokered by Egypt. Hamas spokesman Hazem Qassem said Egyptian mediators, along with officials from Qatar and the U.N., helped reach the deal. He said Hamas could still use "different pressuring tools" to pressure Israel into easing a crippling blockade of Gaza it has enforced along with Egypt.
Israeli Prime Minister Benjamin Netanyahu pointedly noted that "the campaign is not over, and it requires patience and judgment."
The intense fighting over the past two days came to a halt in the early morning hours and residents on both sides went back to their daily routines. The Israeli military said that as of 7 a.m., "all protective restrictions in the home front will be lifted."
Israel and Hamas are bitter enemies and have fought three wars and numerous smaller battles since Hamas took control of Gaza in 2007.
In the latest fighting, the Israeli military carried out airstrikes on some 320 targets inside Gaza, including weapons storage, tunnels and rocket launching and production facilities.
It also deployed tanks and infantry forces to the Gaza frontier, and put another brigade on standby. A Hamas commander was killed in an airstrike, in an apparent return to Israel's policy of "targeting killing" of the group's leaders.
Palestinian medical officials reported 25 deaths, including at least nine militants as well as two pregnant women and two babies. Four Israeli civilians were killed, the first Israeli fatalities from rocket attacks since the 50-day war in 2014. One was killed when his vehicle was hit by a Kornet anti-tank missile near the Gaza border.
Egyptian mediators had been working with the U.N. to broker a cease-fire. Under past Egyptian-brokered deals, Israel has agreed to ease its joint blockade of Gaza with Egypt in exchange for a halt to rocket fire.
The latest fighting broke out after Palestinian militants accused Israel of not honoring an earlier cease-fire deal from March, and opened fire on soldiers on the Israeli side of the Gaza border.
The terms of the latest deal were not known, but recent cease-fires have been short-lived.
Despite its fierce response, Israel appears to have little appetite for another prolonged conflict. Later this week, the country marks Memorial Day, one of the most solemn days of the year, followed by the festive Independence Day. Next week, Israel is to host the popular Eurovision song contest and the backdrop of fighting would have likely overshadowed the occasions and deterred foreign tourists.
Netanyahu, who recently secured re-election in part thanks to the votes of the residents along the Gaza Strip frontier, has traditionally been cautious in his handling of Gaza, for fear of sparking an open-ended war with no clear endgame. But he is under pressure from some voters and his perspective coalition partners to take a more hard-line agenda on Gaza.
Even within his own ruling Likud Party, Netanyahu faced unusual criticism for not going further to quash Gaza militants.
Likud lawmaker Gideon Saar wrote on Twitter that the reported cease-fire was not an achievement for Israel. "The timeframes between these violent attacks on Israel and its citizens are getting shorter and the terror groups in Gaza are getting stronger between them," he wrote.
Benny Gantz, Israel's emerging opposition leader, also criticized Netanyahu, saying that ending the current round amounted to "another surrender to the extortion of Hamas and the terror organizations."
Hamas' leader Ismail Haniyeh said late Sunday that the militant group was "not interested in a new war," and the start on Monday of the Muslim holy month of Ramadan likely lessened motivation for battle.
Signs of normal life slowly returned to Gaza, with banks opening after three days; schools are to reopen on Tuesday.
In the northern Gaza Strip, residents searched for a man and his wife missing among the rubble of an apartment building. The upper two floors of the five-story structure in the Sheikh Zayed residential complex was hit by an Israeli airstrike and four Palestinians — a 12-year-old boy, an infant and her parents — were killed.