Ismail Haniyeh, leader of Hamas, said that a deal had been struck after two days of talks brokered by Egypt.
Egypt has previously attempted to help Hamas and Fatah create a united government for Gaza and the West Bank. The details of the agreement will be explained at a press conference scheduled today, according to delegation chief Fatah Azzam al Ahmad.
He also said that Palestinian President Mahmoud Abbas - who heads both the PA and the Ramallah government - had instructed members of the Fatah delegation to "end the state of Palestinian division once and for all".
The sides also agreed on handing over the Rafah crossing on the border between Egypt and Gaza to the presidential guard, controlled by the Palestinian administration in the West Bank.
Struggling with the fallout from the border blockade, Hamas has found it increasingly hard to govern or provide basic services, such as electricity.
Repeated reconciliation attempts have failed since 2007.
Last week, Palestinian Authority prime minister Rami Hamdallah visited Gaza for the first time since 2015 and his ministers took formal control of government departments in the territory. A small number of people, mainly medical patients, business people and aid workers, use the Erez crossing to enter Israel, usually bound for the West Bank. Internal Palestinian strife has been a major obstacle to peacemaking, with Hamas having fought three wars with Israel since 2008 and continuing to call for its destruction.
The two sides remain sharply at odds, however, over the future of Hamas's 25,000-strong armed wing, which the terror group says is nonnegotiable.
Ahead of the negotiations in Cairo, Israeli President Benjamin Netanyahu warned against "fake reconciliations" and stated once again that Israel demands the demilitarization of Hamas.
Thousands of Palestinians took to the streets across Gaza on Thursday in celebration of the unity pact, with loudspeakers on open cars blasting national songs, youths dancing and hugging, and many waving Palestine and Egyptian flags.