Israeli soldier Gilad Shalit, who has been held in captivity in Gaza for over five years, arrived in Egypt this morning after being released by Hamas, an Israeli military source told AFP.
"He was transferred to Egypt by Hamas 10 minutes ago, and an Israeli colonel will check his state of health," he told AFP. "Afterwards, he will be transferred to Israel at around 9.00 am.
Earlier this morning, buses believed to be carrying 477 Palestinian prisoners were seen headed for Gaza and the West Bank in the first stage of a swap deal to free Shalit.
"The prisoners have started moving," army spokeswoman Avital Leibovich told AFP at Kerem Shalom, which lies at the southernmost point of the Israel-Gaza border.
The landmark deal between Israel and its bitter enemy Hamas will see Israel freeing a total of 1,027 prisoners in exchange for the release of Shalit.
The long-awaited deal, which was signed last week, is the highest price ever paid by the Jewish state for one person.
And if all goes to plan, it will be the first time in 26 years that a captured soldier has been returned to the Jewish state alive.
Public radio said 96 prisoners wearing civilian clothes and with their hands and feet manacled had left Ketziot prison in the south and were headed for Ofer military camp near the West Bank city of Ramallah
Another 334 from the prison were in the process of being transferred to Kerem Shalom crossing at the southernmost point of the Israel-Gaza border.
Some 297 prisoners are to be released into Gaza, leaving Israel through the Kerem Shalom crossing, then being driven along the border to the Egyptian side of the Rafah crossing where they would be greeted by top Hamas figures before entering the Strip.
"We are on the way to Rafah with Mussa Abu Marzuk and Sheikh Salah al-Aruri to welcome the liberated prisoners," spokesman Izzat al-Rishq told Hamas's Al Aqsa television in Gaza.
Another 40 prisoners who are to be deported overseas will remain in Egypt before being sent to host countries, which include Turkey, Syria and Qatar.
An AFP correspondent in Kerem Shalom saw two coachloads of prisoners arriving at the crossing, escorted by a prison service van.
There was a very heavy security presence on the roads around the crossing and Ketziot prison, which lies some 50 kilometres (30 miles) further south, AFP correspondents said.
Emotions were running high across Israel, where Shalit, held for over five years, has enormous symbolic importance.
And Palestinian across the West Bank and Gaza were also preparing to give a heroes' welcome to the returning prisoners.
Shalit was a 19-year-old corporal on duty along the Gaza border when he was captured on June 25 2006 by militants from three Gaza-based groups, including Hamas.
Updated 8.48 a.m. - Three days after he was snatched, Israel launched a massive military operation against Gaza in a bid to secure his release, which lasted five months and left more than 400 Palestinians dead.
Shalit to be transferred to the Egyptian Sinai peninsula before travelling on to Israel.
He will be met at the Tel Nof airbase in southern Israel by Israeli leaders including Prime Minister Benjamin Netanyahu, before being reunited with his family.
Shalit's family have been readjusting and preparing for the long-awaited return of their son to their home in northern Israel, after finally moving out of the Jerusalem protest tent they called home for nearly 16 months.
Throughout the Palestinian territories, celebration preparations were under way, with Hamas expected to hold a massive welcome rally in Gaza City and Palestinian president Mahmud Abbas slated to greet the released prisoners in the West Bank city of Ramallah.
Late on Monday, the Israeli Supreme Court rejected an 11th hour appeal against the swap by families who had lost people in Palestinian attacks.
In all, Israel will free 1,027 Palestinians, with a second of 550 to be released within two months.