Palestinian President Mahmoud Abbas has returned to the occupied West Bank after his successful UN bid for upgraded status.
Abbas told cheering crowds on Sunday: "Yes, now we have a state. Palestine has accomplished a historic achievement at the UN."
The crowds chanted his name and waved Palestinian flags.
The upgrade has angered Israel, which said - hours after the UN General Assembly passed the vote - that it would construct 3,000 new settler homes in East Jerusalem and the West Bank.
Abbas called on Israel on Friday to halt the settlement construction and return to peace talks.
"I've said a thousand times that we want to resume negotiations and we are ready to do it," Abbas told reporters in New York.
"We are not setting any condition but there are at least 15 UN resolutions which consider settlement activity as illegal and an obstacle to peace which must be removed."
Israel has also withheld this month's transfer of tax revenues to the Palestinian Authority in response to the status upgrade.
Under interim peace deals, which Israel says the Palestinians violated by unilaterally seeking an upgrade of their status, it collects about $100m a month in duties on behalf of the authority.
But, Israeli officials said, the authority owes about $200m to the Israel Electric Corporation, and that money would now be deducted from the tax transfers.