A new Palestinian unity government has been sworn in, marking a key step towards ending a major rift between factions in the West Bank and Gaza.
Palestinian President Mahmoud Abbas hailed the event, saying "a black page in history has been turned forever".
The two sides had governed separately since Hamas, which won elections in 2006, ousted Fatah from Gaza in 2007.
The US has said it will work with the new government, a move that Israel described as "disappointing".
Israel insists it will not deal with a Palestinian government backed by Hamas - which is sworn to Israel's destruction.
Following the Palestinian announcement, Israeli Prime Minister Benjamin Netanyahu's security cabinet said it would hold Mr Abbas and the new Palestinian government accountable for any rocket fire from the Gaza Strip.
In a statement, Mr Netanyahu urged world leaders not to "rush to recognise" the new government.
Analysis - Quentin Sommerville, BBC News, Ramallah
A seven-year split, a number of failed reconciliations, a month of negotiations and still, at the last minute, the unity government almost didn't happen. A disagreement over the post of prisons minister was resolved, though, and the swearing-in of the new cabinet in Ramallah took place. It was another clear indication of the frailty of this uneasy partnership.
In the end, political and economic pressures won the day. Gaza is broke and Hamas needs the help of Mahmoud Abbas. For his part, he needs a political victory following the failure of peace talks with Israel over a month ago.
It's a partnership that many Palestinians have long wanted, and one that Israel says the world should reject. Hamas wants Israel's destruction and believes in an armed struggle to achieve this end. Israel says Mr Abbas' claim that the government of technocrats has no party loyalties is a "trick" that shouldn't be believed. The United States and others are reserving judgement for now, but sanctions from Israel are almost certain to follow.
Israel suspended crisis-hit peace talks with the Palestinians in April in response to the announcement of the reconciliation deal.
Hamas, which is designated a terrorist organisation by Israel and other countries, opposes the peace talks, though President Abbas has said the new government will abide by previous agreements.
US State Department spokeswoman Jen Psaki said Washington believed President Abbas had "formed an interim technocratic government... that does not include members affiliated with Hamas".
"Based on what we know now, we intend to work with this government but will be watching closely to ensure that it upholds principles that President Abbas reiterated today," she said.
Israel was swift to voice its displeasure.
"We are deeply disappointed by the state department regarding working with the Palestinian unity government," an Israeli official said.
The new government comprises 17 politically independent ministers and must organise elections to be held within six months.
It is headed by incumbent Palestinian Prime Minister Rami Hamdallah.
The ministers took the oath of office in a televised ceremony at President Abbas's compound in Ramallah.
"Today, with the formation of a national consensus government, we announce the end of a Palestinian division that has greatly damaged our national case," said President Abbas.
As the new administration took office, the Hamas government in Gaza resigned.
Hamas's outgoing Prime Minister Ismail Haniya welcomed the new cabinet as "a government of one people and one political system".
Three Gaza-based members of the new government were denied permission by Israel to cross into the West Bank for the ceremony.
Israel tightly controls who exits Gaza into its territory as part of what it says are security measures to prevent attacks.
Israel said it would cease all but security co-ordination with the Palestinians if the government was formed.