Israeli troops pulled back from the northern West Bank city of Nablus after a two-day crackdown on militants in which one person was killed and a dozen wounded, Palestinian security sources and witnesses said.
Israeli army jeeps were seen withdrawing late on Monday and residents said they could see no soldiers left in the Old City, the warren of streets in the city's heart which was the focus of the Israeli operation.
An Israeli army spokesman would neither confirm nor deny the pullout.
Israeli officials insisted the incursion, the biggest in Nablus for about a year, was necessary to root out weapons caches and wanted militants in a city that had become a "terrorist hub".
Palestinian president Mahmud Abbas condemned the operation, warning it threatened to hobble a renewed peace push in the region by the United States.