President Mahmoud Abbas has sworn in a Palestinian unity government.
Speaking after the swearing-in ceremony, Abbas announced it marks the end of a 7-year internal division.
The formation of the unity government has been strongly opposed by the Israeli authorities.
Abbas pledged to respond to any Israeli actions.
"Any measures which may be taken by the Israeli authorities and their effect on the interests of the Palestinian people will not pass without a response from us. We are not interested in escalation and we are not interested in more tension. But we would not keep silent in the face of these sanctions. "
The ceremony in the city of Ramallah took place after the last-minute resolve of disagreements on the foreign affairs and prisoners' affairs portfolios.
None of the 17 ministers, headed by Prime Minister Rami Hamdallah, is affiliated with Hamas.
Ismail Haniyeh, the outgoing Hamas prime minister in Gaza, also welcomes the unity government.
"From today, you will not read or hear in any local or foreign broadcast any more the term of 'rival Palestinian parties'. But you will hear the national unity government, the united people, the united leadership, with our different programs aiming to achieve freedom, liberation and independence. I congratulate the Palestinian people everywhere for this historical moment."
Despite the optimism, Haniyeh also acknowledges that the new government faces many difficulties, including ending the siege that is still imposed on the Gaza Strip.
Meanwhile the United States has voiced intention to work with the newly formed government.
United States State Department spokeswoman Jen Psaki:
"Moving forward we will be judging this government by its actions. Based on what we know now, we intend to work with this government but we'll be watching closely to ensure that it upholds the principles that President Abbas reiterated today."
According to the agreement reached by the Fatah and Hamas movement, the unity government will serve a six-month term, in preparation for a general election.