While there has been no official cease-fire announcement from either side, protective restrictions have been lifted in southern Israel and Hamas’ radio station reported a pause in fighting.
Palestinian medical officials reported 23 deaths, including at least nine militants as well as two pregnant women and two babies.
Four Israelis also were killed from incoming fire, the first Israeli fatalities from rocket fire since the 50-day war in 2014.
The Israeli military announced its decision, saying: "As of 7 a.m., all protective restrictions in the home front will be lifted."
Schools and roads had been closed, and residents had been encouraged to remain indoors and near bomb shelters as intense rocket fire pounded the area.
In Gaza, which is under a crippling blockade from Israel, Hamas' Al-Aqsa radio station had a short item saying a cease-fire had been reached.
However, neither the strip's Hamas rulers nor the smaller Islamic Jihad militant group that is active in Gaza issued any formal announcement.
Egyptian mediators had been working with the United Nations to broker a cease-fire.
Under past Egyptian-brokered deals, Israel has agreed to ease the blockade of Gaza in exchange for a halt to rocket fire.
The latest fighting broke out after Palestinian militants accused Israel of not honoring an earlier cease-fire deal from March.
The terms of the latest deal were not immediately known, but recent cease-fires have been short-lived.