Israel and the militant Palestinian organization Islamic Jihad announced a ceasefire on Sunday evening.
This should come into force at 11:30 p.m. local time (10:30 p.m. CEST), said an Israeli spokesman and the organization in the Gaza Strip.
Both thanked Egypt for mediating in the conflict.
The jihad insists on its right "to respond to any Israeli aggression," the Palestinian organization said.
Israel also stressed that it would react harshly in the event of violations.
A high-ranking Egyptian delegation arrived in Gaza in the evening to negotiate details of the ceasefire.
The German press agency learned this from security circles.
The agreement is said to include the release of two Palestinian prisoners in Israel, including Bassam al-Saadi, a senior leader of Islamic Jihad.
His arrest in the West Bank last Monday preceded the latest escalation.
Last year, Egypt also mediated a ceasefire between Israel and the Islamist Hamas after an eleven-day war.
The Israeli military launched the "Dawn" military operation with airstrikes against Islamic Jihad in the Gaza Strip on Friday.
The group, which is closely linked to Israel's arch-enemy Iran, has been classified as a terrorist organization by the EU and the US.
Since then, Palestinian militants have fired more than 900 rockets at Israeli towns, according to the military.
160 of them hit the Gaza Strip itself.
According to the Palestinian Ministry of Health, 43 people have died since Friday in the Gaza Strip as of Sunday evening.
More than 300 were injured.
The current escalation of violence is the most violent in the Gaza Strip since May last year.
The radical Islamic Hamas, which has ruled in the Gaza Strip since 2007, fired rockets in the direction of Israel at the time, prompting the Israeli air force to bomb targets in the Gaza Strip.
More than 260 people were killed in the Gaza Strip during the 11-day fighting, and 13 were killed in Israel.