The deployment on Thursday comes after newly elected Palestinian President Mahmud Abbas ordered security services to halt attacks against Israel.
"We have begun deploying our forces north and east of Gaza City to prevent any violations or attacks against Israel," a senior Palestinian security official said after Israeli security officials and Palestinian commanders met earlier during the day.
"There was a security meeting this morning and Israel gave its green light to our working plan.
"We have guarantees from Israel that the posts will not be targeted at any time day or night and that there will be no incursions."
About 1000 members of the Palestinian border police force, military intelligence and national security are involved in the initial deployment.
"Instructions have been given to the troops that anyone who is seen using mortars towards Israel will be arrested," a Palestinian source said.
Israel's army radio said Defence Minister Shaul Mofaz had authorised the deployment of nine regiments of armed Palestinians in northern Gaza.
Members of the Force 17 presidential guard were among the security forces authorised to operate in the area, the radio said.
Abbas has been in Gaza City since Tuesday to talk the leaders of Palestinian resistance groups into a ceasefire with Israel.
After attending prayers at the city's main mosque at the start of the Muslim holiday of Eid al-Adha, Abbas said he was confident he could reach an agreement with the groups.
"With the help of God, I hope that our dialogue can succeed," he said.