The truce, intended to last six months, means that each side agrees not to fire on the other, holding out the possibility of bringing the past year of deadly violence to a period of détente.
The hope for calm in Gaza and southern Israel comes as Israel is reaching out to foes Lebanon and Syria in what appears to be a renewed effort to settle long-unresolved regional conflicts. Israel and Syria have just finished a second round of indirect peace talks that address the disputed Golan Heights, which Israel captured in the 1967 Arab-Israeli war. Now, the Jewish state is offering talks with Lebanon that would include the Shebba Farms, which both countries claim as their own.
In the deal with Hamas, what isn't in the agreement has both Israelis and Palestinians worried. Palestinian critics say that since the deal does not include a promise by Israel to stop its West Bank military operations, the possibility of the cease-fire collapsing quickly is real. In the past, Gaza militants, such as Islamic Jihad, have fired rockets or mortars that they say are in retaliation for Israeli actions in the West Bank.
While Islamic Jihad has said it would not disrupt the truce, according to Hamas, it did fire rockets into Israel Wednesday. The militants said the attack was in response to Israel killing 10 of its members over the past two days.
Israelis are equally tentative. Many say that the cease-fire will give Hamas time to rebuild. Others are concerned the deal emboldens Hamas vis-á-vis Fatah, which controls the West Bank.
"It's not clear to what extent Hamas can maintain a cease-fire, especially in terms of imposing it on some of the non-Hamas organizations, and even among some of the Hamas people themselves," says Ephraim Kam, deputy director of the Institute for National Security Studies (INSS), a think tank at Tel Aviv University.
"Among the security establishment in Israel, the expectation is that it won't hold for long," he adds. "Many feel that the [truce] will just be a postponement of the unavoidable clash which might take place under even worse conditions, in which Hamas will have more sophisticated weapons and be better trained."
But, he acknowledges, that formula works both ways. "The IDF [Israel Defense Forces] will also be able to strengthen itself to fight Hamas, if a showdown is going to take place."
Hamas officials in Gaza say they will have no difficulty enforcing the deal, and that it's up to Israel to make sure that it sticks.
"We are determined to keep to the commitments. The ball is in Israel's court – it is the one meant to implement the understandings into real actions," Hamas spokesman Sami Abu-Zuhri said.
Both the Israeli government and the Hamas leadership have been trying to do crisis management on many levels. Israeli politicians from many different parties have been working to force out Prime Minister Ehud Olmert, who faces corruption charges. Hamas leaders, meanwhile, have to contend with the severity of the economic deterioration in Gaza since militants staged a violent coup a year ago, overrunning Fatah.
The cease-fire, which has been in the works for several months, does not include agreement on some crucial points that Israeli and Hamas officials had hoped for. Israel wanted it to include the release of Cpl. Gilad Shalit, an Israeli soldier captured by Hamas two years ago, and Palestinians wanted to see an immediate opening of the Rafah crossing into Egypt. But in the best-case scenario, the cease-fire could be a springboard to progress on both issues.
In the southern Israeli towns that have felt the brunt of the uptick in rocket and mortar fire from Gaza militants, skepticism prevails.
In early May, a round of mortars landed on Kibbutz Kfar Azza, within a mile of the Gaza border, killing one. In the kibbutz cafeteria Wednesday, Amos Zifroni gestured to an empty expanse of grass outside, explaining that the mortar fire made it too dangerous for children to play outside.
"I hope it will be different with the cease-fire. We hope there will be quiet for some time," he says. "But like everyone, I don't think it will hold too long."
But Mr. Zifroni says he believes the truce will give both sides some breathing room to negotiate the release of Corporal Shalit and negotiate the reopening of the border crossing.
Another kibbutz member, Ziva Cohen, says a longer-term solution is needed. "Shooting doesn't seem to be a solution. At the end of the day, you need to talk."
In Gaza City, the mixed emotions about the truce mirrored those found inside the bucolic kibbutz across the border.
Mohammed Shanti's clothing store is nearly empty of merchandise because of the Israeli-blockade on the strip. "I am very happy that, after long suffering, business will improve. I have a lot of clothes that I bought before the siege and they are stuck in Israeli stores. I have started my contacts with Israeli partners in Tel Aviv to prepare for resuming imports," he says.
"But I am afraid that the agreement will not continue for long," he adds. "The Israelis were never committed to any agreement. So, if the borders open, I plan to buy a lot of clothes."