Gaza-based Islamist group Hamas and the Palestine Liberation Organisation have announced a unity pact, President Mahmoud Abbas has said.
The move has widened divisions in US-brokered peace-talks with Israel.
The reconciliation comes after seven years of internal bickering within the Palestinian groups and raises the possibility of a unity government and national elections within six months.
However, Israel has criticised the deal, saying that President Abbas has chosen "Hamas over peace" and cancelled a session of peace talks in Jerusalem.
More top news
Alton Towers rollercoaster crash victim Vicky Balch has posted an 'inspired' first picture since losing her right leg.
Comedian and activist Russell Brand has called Friday's minute's silence for the victims of the Tunisia beach massacre 'total bullsh*t'.
A robot has killed a worker at a Volkswagen car production plant in Germany, the corporation has said.