Officials in Israel say they have received a video recording of a soldier held by the Palestinian Islamist group Hamas for the past three years.
The handover was carried out as Israel released 20 Palestinian women prisoners in its part of the exchange.
Israeli officials say the video has been viewed and the swap was given the green light.
Israeli Prime Minister Benjamin Netanyahu said the road to Sgt Gilad Shalit's release would be 'long and difficult', but 'the knowledge that he is safe and well should encourage us all'.
The video, said to show proof that Sgt Shalit is alive and well, may be a step towards ending his captivity. He is held by Hamas, which governs the Gaza Strip.
In the video, Sgt Shalit, who was seized near Israel's border with Gaza, appeared clean-shaven and with trimmed hair.
The conscripted soldier, now aged 23, smiled briefly at times as he spoke coherently in the video, which lasted for more than two minutes.
He was dressed in uniform, seated in a chair against a featureless wall and was holding a newspaper dated 14 September 2009.
"I am reading the paper to find information about myself and hoping to read about my release soon," Sgt Shalit said.
"I have been waiting and hoping for a long time to return home."
UN Human Rights Council defers response
Meanwhile the BBC reports the United Nations Human Rights Council has deferred its response to a report on conflict in Gaza nine months ago, in which more than 1,300 Palestinians died.
The report says Israel and Palestinian militants committed war crimes, and possible crimes against humanity, during the Israeli offensive in Gaza.
The probe, headed by former South African Judge Richard Goldstone, concludes that Israel "committed actions amounting to war crimes, possibly crimes against humanity" during its Gaza offensive in December last year.
It asks the UN Security Council to call on Israel to conduct "appropriate investigations," to monitor them, and to refer the matter to the ICC if they're deemed not to meet international standards.
The report found that the firing of rockets by Palestinian armed groups also amounted to war crimes, and called for a similar process of accountability for the Gaza authorities.
The report has come under sustained attack from Israel and its supporters.
The Human Rights Council, which since last month includes the United States, failed to agree on a draft resolution endorsing the report. It will now be considered in March.
Palestinian officials denied the deferral was a victory for Israel.
It was reported earlier on Friday that the Palestinian Authority had withdrawn its support for a resolution endorsing the report, after strong pressure from Washington, but this was strongly denied by Palestinian officials.
The Human Rights Council had been due to vote on Friday on a resolution that would have forwarded the report, written by leading South African judge Richard Goldstone, to the Security Council.
But Pakistan, speaking for Arab, Islamic and African sponsors of a resolution, formally asked for it to be deferred until the next regular session in March, to "give more time for a broad-based and comprehensive consideration", Pakistan's envoy Zamir Akram said.
Palestinian deputy ambassador Imad Zuhairi told the Associated Press that the deferral was a result of his government's desire to build broad international support for action next year.
"This is not a victory for Israel. The report is there and we will ensure that the report remains alive," Mr Zuhairi said.