Twenty-one inmates convicted of killing Israelis before the 1993 Oslo accords were released from Ofer Prison and returned to Ramallah in the West Bank via the Beitunia checkpoint.
Five prisoners were freed to the Gaza Strip after they set out from the prison earlier in the day to await their release at the Erez border crossing.
Some two-thousand Palestinians gathered late Tuesday at Mukata, the PLO presidential compound, in Ramallah to celebrate the release of the 21 prisoners to the West Bank, Israel Radio reported.
The crowds waved flags baring the symbols of the PLO, Fatah and the Popular Front for the Liberation of Palestine and carried signs with pictures of the convicted murderers.
"Our heroes are coming home, long live the prisoners," they chanted in the predawn celebrations.
Upon their arrival to Ramallah, the released prisoners were greeted by Palestinian Authority President Mahmoud Abbas at the tomb of former Palestinian leader Yasser Arafat.
A senior Palestinian official welcomed the 21 released prisoners to the West Bank, vowing that the PLO would never sign a peace accord with Israel until it secured the freedom of every Palestinian inmate.
"An agreement will never be signed without freeing all prisoners," Palestinian news agency Ma'an quoted Palestinian Prisoner Affairs Minister Issa Qaraqe as saying.
"We congratulate and greet our brothers who arrived from behind bars to the world of freedom. We welcome them and congratulate ourselves for this great reunion. We affirm that we had said 'let them return to their homes and not anywhere else,'" Qaraqe said at the greeting ceremony for the freed prisoners in Ramallah.
The release Wednesday marked the second of four stages of a deal between Israel and the PA for resuming peace talks in July. Israel was expected to release the third batch of prisoners in December or January, and another in March or April.
"Today is the second joy, and in two months, there is a third, a fourth and a fifth until jails are cleared and they all come back," Ma'an quoted Qaraqe as saying, adding that "our joy remains incomplete until all prisoners are freed."
The High Court of Justice earlier Tuesday rejected an appeal by the Almagor Terror Victims Association against the release of the convicted murderers that had been serving sentence of 19 to 28 years.
On August 13, Israel released the first group of 26 prisoners. Israel was given two choices of goodwill gestures at the onset of the current round of peace negotiations, to either freeze settlement construction or release prisoners.
All told, 104 terrorists are to be released by the conclusion of the nine-month negotiations at the end of April.
Defense Minister Moshe Ya'alon said Tuesday the painful move was guided by the government's responsibility to navigate according to "long-term security considerations." Speaking at a ceremony saluting Bedouin IDF soldiers, Ya'alon said he spent the majority of his adult life fighting Palestinian terrorists and this was a difficult day for him.
In recent months Israel has been faced with sensitive diplomatic circumstances and heavy strategic choices obligating it to take "difficult and painful" steps, he said.
The government on Sunday approved the release of the following prisoners:
1. Ahmed said al-Damuni, arrested in September 1990
2. Massoud Issa Rajib Amer, arrested in 1993
3. Mohamed Yusef Turkeman, arrested in October 1992
4. Osama Zakariya Abu Hanani, arrested in October 1992
5. Ahmed Said Abdel Aziz, arrested in February 199
6. Israr Mustafa Samarin, arrested in August 1992
7. Musa Izzat Kura’n, arrested in August 1992
8. Sharif Hasan Abu Dhailah, arrested in May 1992
9. Mustafa Amer Ghnaimat, arrested in July 1985
10. Ziad Mahmoud Ghnaimat, arrested in June 1985
11. Haza’a Mohamed Sa’di, arrested in July 1985
12.Othman Abdallah Bani Hasan, arrested in July 1985
13. Mohamed Musbah Ashour, arrested in February 1986
14. Issa Nimer Abed Rabbo, arrested in October 1984
15. Mohamed Ahmed al- Sabbagh, arrested in January 1991
16. Afu Musbah Shkair, arrested in July 1986
17. Mohamed Ibrahim Nasr, arrested in May 1985
18. Rafi Farhoud Karajeh, arrested in May 1985
19. Hazem Kassem Shbair, arrested in March 1994
20. Yusef Awwad Masalha, arrested in May 1993
21. Rizek Ali Salah, arrested in June 1993
22. Muayad Salim Hijja, arrested in May 1992
23. Najeh Mohamed Muqbel, arrested in July 1990
24. Abdel Rahman Yusef al- Haj, arrested in February 1992
25. Khaled Daoud Azraq, arrested in February 1991
26. Hilmi Hamad al-Amawi, arrested in January 1994
Herb Keinon and Reuters contributed to this report.