Liberation Tigers of Tamil Eelam (LTTE) leaders, government representatives and UN diplomats on Friday ceremonially lit a traditional coconut oil lamp as UNICEF took charge of 49 child soldiers handed over by the rebels.
The children will be kept at a transit centre in Kilinochchi before they are deemed ready to return to their families.
"This is a big day for the children who have been among the people at most risk during the conflict," Ted Chaiban, the head of UNICEF in Sri Lanka said.
"But, there are still cases of recruitment and it has to stop," he said.
Despite earlier pledges not to recruit children below the age of 18, the rebel Liberation Tigers of Tamil Eelam (LTTE) have often been accused of conscripting thousands of minors in their battles against government forces.
"This is a big day for the children who have been among the people at most risk during the conflict"
UNICEF Sri Lanka
LTTE denies taking in underage recruits and insists the 49 children released were among those who repeatedly volunteered to join the rebel army to escape poverty and social problems at home.
Chaiban said UNICEF had complaints of 1,155 children being taken away by the LTTE to join their ranks.
Since April, UNICEF has been holding training programmes in rebel-held areas to build awareness of child rights and reintegrate underage recruits into the community through vocational training and treatment for mental trauma.
Both the rebels and the government agreed in their fifth round of peace talks in Berlin in February to allow UNICEF a greater role in addressing problems faced by children affected by the war.