Syrian activists say Islamic State of Iraq and the Levant (ISIL, also known as ISIS) fighters are withdrawing from the last rebel enclave just outside the capital, Damascus.
Videos on social media appeared to show buses entering Yarmouk camp after midnight on Sunday to transport fighters and their families out of the area.
Syrian state media, however, denied that there was a deal between ISIL and the government.
The suburb of Damascus has seen the most intense bombardment by the Syrian army during the past four weeks.
ISIL fighters remained there after other armed groups around the capital left.
Before the war, Yarmouk camp was home to one of the most prosperous Palestinian refugee communities in the Middle East.
Now it’s a heap of rubble, with its former residents scattered across the region.
The United Nations Relief and Works Agency for Palestine Refugees (UNRWA) said it was overwhelmed by the size of the humanitarian disaster.
“The people have simply fled,” Christopher Gunness, spokesperson for UNRWA, told Al Jazeera from occupied East Jerusalem.
“This pitiful war has extracted an untold price on the people of Yarmouk,” added Gunness, who visited Syria last week.
He said what was “one of the most thriving Palestinian refugee camps in the Middle East” was completely destroyed.
“They [Yarmouk residents] fled through the area of Yalda, which is adjacent to Damascus. They came to our office in Damascus in a traumatised, in a completely bombed-out state, with absolutely nothing,” he said
“Yarmouk was once a symbol of Palestinian – if you like – prosperity; it was part of their place in the Middle East, one of the largest refugee camps that we had and yet today it lies in utter ruins.”