Israelis and Palestinians may have found a face-saving formula that gives all parties a way out of 33 exhausting months of violence. Militant groups declare a truce, Israel agrees to return some land, and the Palestinian Authority promises to hold up its end by trying to prevent attacks against Israel.
With rigorous US chaperoning, restraint by all sides, and a healthy dose of luck, Sunday's steps forward might disentangle the warring parties. In a best-case scenario the fighting ends for good and a Palestinian state emerges by 2005, as the internationally backed "road map" peace plan sets out to do.
But terror attacks by renegades or Israeli military strikes could rekindle the violence in a flash.
Israel reacted coldly to Sunday's decision by Hamas and Islamic Jihad to stop attacks for three months. Yasser Arafat's Fatah group joined the truce later, declaring it would halt all military operations for six months. Negotiators have said the timeframe could be extended if Israel ends its military operations and releases prisoners.
Israeli troops and tanks began pulling out of northern Gaza after sundown Sunday, military sources said, in keeping with an agreement to hand responsibility for security in Gaza over to the Palestinians.
For its part, Israel wants more than a truce -- it wants the militants disarmed and arrested so they cannot resume violence in the future -- a demand the Palestinian Authority hasn't agreed to and the militants bitterly reject.
Still, an elegant way out of the deadlock may be found in the end, because the players have a serious stake in the cease-fire's success.
For Israelis and their prime minister, Ariel Sharon, the road map offers a way out of a nightmare which saw their public places targeted almost at will by suicide bombers and gunmen.
An end to violence would move the Palestinians toward the state they have longed for. Without this it's unlikely the politically feeble Mahmoud Abbas can survive as Palestinian prime minister, which would be embarrassing for the Bush administration, at whose prodding Abbas was appointed to the new post several months ago.
US diplomatic credibility is also on the line in a broader sense after US President George W. Bush personally launched the road map at a June 4 Mideast summit. He has since dispatched his secretary of state and national security adviser to the region in a high-profile, high-stakes effort to hammer it home.
US National Security Adviser Condoleezza Rice was in town for the cease-fire announcement -- and for the conclusion of a deal on transferring parts of Gaza back to Palestinian security control. The deal could be expanded within days to the West Bank town of Bethlehem.
The high-level supervision underscored how for Bush, peace -- or at least calm -- is a key element in his vision for a changed Middle East, alongside the victories in Afghanistan and Iraq and the war on the al-Qaida terrorist organization. With Israeli-Palestinian trust at rock-bottom, his continued vigilance will likely be required.
Just over 1,000 days of conflict have taken a terrible toll. More than 2,400 Palestinians and 800 Israelis have died. The Palestinians' nascent economy and government infrastructure, born of the 1990s autonomy accords, lie in ruins.
And in Israel more than a tenth of the workforce is jobless, poverty is spreading to the middle class and a once-promising tourism industry has been devastated.