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Israel freed 26 veteran Palestinian prisoners on Wednesday, alongside US-brokered peace talks, AFP correspondents said.
A group of 21 prisoners from the West Bank left Ofer prison, near Jerusalem, shortly after 1:00 am (2300 GMT) and the other five crossed moments later into the Gaza strip, correspondents at both sites said.
The West Bankers left Ofer in two minibuses with blacked-out windows and drove the short distance to the Beitunia crossing into the West Bank where they were greeted with cheers and fireworks.
They then set out for nearby Ramallah were they were to be welcomed at an official ceremony headed by Palestinian president Mahmud Abbas.
The Gazans were met by hundreds of relatives and well-wishers as they entered the strip through the Erez crossing from Israel.
All 26 were convicted for killing Israelis, with most of the attacks occurring before the 1993 Oslo Accords, which granted the Palestinians limited self-rule but failed to usher in an independent state.
Netanyahu agreed to release 104 prisoners in stages as part of the resumption of talks in late July, after a three-year hiatus. A first tranche of 26 was freed on August 13.
The talks are held under a US-imposed media blackout but a senior Palestinian official said Tuesday that Israel had adopted hardline positions and negotiations had so far produced "no tangible progress".
"The current Israeli negotiating position is the worst in more than 20 years," Yasser Abed Rabbo, a top official with the Palestine Liberation Organisation, said in a statement.
"They want security first, and that the borders of the state of Palestine should be set out according to Israeli security needs that never end, and that will undermine the possibility of establishing a sovereign Palestinian state."