About 1500 soldiers and riot police warded off mobs along the 14km-long Rafah frontier on Saturday, where anarchy has reigned since Israeli troops left the Gaza Strip on Monday.
Cranes lifted cement blocks to seal holes in the border fence that had been knocked out by smugglers and armed factions.
"We deployed today 1500 police and national security forces. It started at 7am (0400 GMT) and it is completed now," Interior Ministry spokesman Tawfiq Abu Khussa said.
Egyptian and Palestinian police were only permitting people to head back to their native soil and not allowing anyone else to pass, limiting the traffic to one section of the wall.
They checked identification cards and gave chase to anyone who tried to vault into Egypt.
Egyptian army trucks rode up and down the border to enforce the clampdown. The flow of smuggled goods brought in by the tonne this week fell to a trickle as people hauled back only small quantities of items such as cigarettes and gasoline.
Palestinian President Mahmoud Abbas, who has struggled to govern Gaza amid widespread looting of Jewish settlements since Israel exited the coastal territory, vowed on Friday to bring the chaotic border situation under control within days.
Abbas (L) has vowed to bring
control to the Rafah area
Israeli and Palestinian officials have worried that the collapse of border controls might have allowed large quantities of weapons and illegal drugs to be smuggled into the territory.
As part of Israel's pullout deal from Gaza, the Palestinian Authority and Egypt had agreed to police the Rafah border, which Israel had locked down over the five-year Palestinian uprising.
But armed groups have defied Abbas, flouting his rule and exposing his government's lack of power on the ground.
On Wednesday, people watched as Hamas fighters detonated a section of Palestinian border fence, ignoring pleas from the Palestinian security forces.
West Bank celebrations
Hundreds of Palestinians celebrated in an evacuated Jewish settlement in the West Bank on Saturday after Israel's pullout from the area, witnesses said.
About 300 Palestinians waved Palestinian flags and burned wreckage in the centre of Homash.
Landowners from Barqa and Sila al-Zahr villages as well as local residents rushed to the area.
Dozens of Palestinians took away wooden planks and electric cables.
The small settlement south of the town of Jenin was evacuated of residents last month as part of Israel's withdrawal from four West Bank settlements and the entire Gaza Strip.
The army said that the last infrastructure at Homash was dismantled on Friday and Palestinians were free to enter.
Troops will return to occasionally patrol the area that will remain under Israeli security control, the army spokesman said.
The Israeli troops had earlier sealed off the Jenin area from the other West Bank zones.
With an eye to reviving the peace process, the offices of Abbas and Israeli Prime Minister Ariel Sharon confirmed the two men were to hold a summit on 1 or 2 October.
Sharon (L) and Abbas (R) will hold
talks in early October
It will be their first meeting since Israel completed its withdrawal from Gaza after a 38-year presence in the impoverished territory.
"They will discuss Israel's next step and how to implement more of the roadmap," Abbas's spokesman Nabil Abu Rudeina said.
He was referring to an internationally drafted peace blueprint intended to pave the way for Palestinian statehood that has made next to no progress since its launch in 2003.
Fighters arrested, shepherds freed
In other developments, the Israeli army announced it had arrested two Fatah fighters in the al-Aza camp near Bethlehem in the West Bank.
Israel also freed two Lebanese shepherds who had been detained in the disputed Shebaa Farms border area on Friday, the military said.