The leaders of Hamas and Fatah have signed a reconciliation deal to establish a unity government and end four years of hostilities between their two factions.
President Mahmoud Abbas of Fatah said in Cairo that Palestinians had turned the ''black page of division''.
Hamas leader Khaled Meshaal said the goal is a sovereign Palestinian state on the West Bank and the Gaza Strip ''without giving up a single inch of land''.
The BBC reports the two had not met since the expulsion of Fatah from Gaza in 2007, after a surprise election victory by Hamas a year earlier.
Correspondents say the recent Arab uprisings have given fresh momentum to reconciliation.
The agreement paves the way for a joint interim government ahead of national elections next year.
"The state of Palestine must be born this year," Mr Abbas said.
However, Israeli Prime Minister Benjamin Netanyahu describes the Palestinian deal as a tremendous blow to peace and a great victory for terrorism.
He had urged Mr Abbas to choose peace with Israel over a reconciliation with Hamas.