Twenty-one of the inmates, all convicted of murder, arrived in Ramallah by bus shortly after 1 a.m., Ma'an News Agency reported. Five others crossed over into Gaza.
The group of 21 were taken to the compound of Palestinian Authority President Mahmoud Abbas where supporters and officials greeted them warmly.
Freed prisoner Riziq Salah of al-Khader near Bethlehem said his joy was tempered by sadness for fellow inmates still incarcerated.
"I lived with my wife five years but with my cellmates, I have lived 21 years seeing them 24 hours a day," he told Palestine TV in a phone interview.
The release of the prisoners was the second in a four-phase deal that jump-started the stalled peace negotiations.
On Monday, about 2,000 Israelis converged outside Ofer prison to protest the release, chanting "Death to terrorists!" and displaying posters that said, "Are we crazy? We're releasing murderers."
Ma'an reported the prisoners support group Addameer says there are still 5,007 Palestinian prisoners in Israeli prisons.