The boats set sail on Friday on a 370km voyage from the Mediterranean island of Cyprus carrying activists from 17 countries, including Israel, with the aim of drawing attention to Israel's blockade of Gaza and its affect on the people there.
The boats sailed through choppy waters into Gaza City's main port on Saturday, where they were greeted by thousands of people waving Palestinian flags, many of them sailing around the harbour in boats.
Ismail Haniya, the Hamas leader and dismissed Palestinian prime minster, called on the world to follow the example of the international activists movement and "break the siege on Gaza".
"We deeply appreciate and salute the activists on the two boats", Haniya told Al Jazeera in a phone interview.
Haniya said that it was time for Egypt to reopen the Rafah crossing and end the siege once and for all.
Egypt reopened the crossing last January after Palestinians blew up part of the border barrier, allowing thousands to stock up on supplies from border towns.
Cairo sealed the crossing three days later under pressure from both the United States and the Israeli government, to "protect its own sovereignty."
Jibril al-Rjoub, a senior Fatah leader, also welcomed the "breach of the embargo", describing the international activists as "humanists".
"The two boats defiance the of the Israeli blockade is a glimmer of hope that could be an opening of an end of the siege", the former Palestinian security chief told Al Jazeera in an interview from the West Bank of Ramallah.
Rjoub called for both an immediate reconcilation between Fatah and Hamas to unite the efforts to restore national unity, and to forge ahead with efforts to alleviate Palestinian suffering.
Local activists and charity workers had feared Israel's military would step in to prevent the activists from reaching their destination.
Andrew Mumcie, one of the activists on board one of the boats, told Al Jazeera he was "overjoyed" by their success in reaching Gaza's shore.
"Now we will go back to Cyprus and organise another trip," Mumcie said, adding the group would continue its activities until Israel's siege of Gaza was lifted.
Israel's foreign ministry said it had been closely monitoring the 21-metre-long "Free Gaza" and 18-metre-long "Liberty" boats after they left the Cypriot port of Larnaca.
Aviv Sharon, an Israeli foreign ministry spokesman, earlier said: "They want provocation at sea, but they won't get it.
"We know who the passengers are and what they are bringing with them, and so we have no problem letting them through."
Sharon had said earlier in the day that "all options" were being considered to prevent the ships from entering embargoed waters.
Angela Godfrey-Goldstein, a Jerusalem-based spokeswoman for the Free Gaza Movement which organised the event, said the boats' communications systems had been attacked by "electronic piracy" earlier in the day.
The activists' group was comprised of people between 22 and 81, included students, lawyers, doctors, journalists and an online poker player, organisers said.
Mostly American and British, they included Lauren Booth, the sister-in-law of Tony Blair, the former British prime minister who is now a Middle East envoy.
Many of the activists said they had received death threats before they set sail, leading some to drop out.
Israel has tightened its blockade of Gaza since Hamas seized power in June 2007.