The office of caretaker Israeli Prime Minister Yair Lapid confirmed on Sunday that a cease-fire with Palestinian militants would come into effect at 11:30 p.m. local time (2030 GMT).
The Palestinian Islamic Jihad group had announced earlier that they agreed to the truce mediated by Egypt.
How the latest round of violence unfolded
Israel began its military operation, labeled "Breaking Dawn," on Friday. So far, Israeli airstrikes have killed several senior Islamic Jihad members, including high-ranking commanders Khaled Mansour and Tayseer al-Jabari.
The Israeli military said both Mansour and al-Jabari were planning terror attacks.
The Palestinian Health Ministry said 41 people have died from Israeli operations so far, including several children. Israel said the children were killed due to a misfired rocket by Islamic Jihad.
According to Gaza authorities, at least 311 people have been wounded so far.
The Palestinian militants have launched hundreds of rockets at Israeli cities, including Tel Aviv and Ashkelon. So far, two Israelis have been wounded as civilians rushed to shelters due to the rocket fire.
Israel also said Palestinian mortars damaged the Israel-Gaza Erez border crossing.
The US, EU and other members of the international community have called for de-escalation of tensions.
Hamas, the ruling Islamist authority of Gaza, has mostly stayed out the conflict. Hamas and Islamic Jihad have both been deemed terrorist organizations by the EU and US and aim to eliminate Israel.
Egypt has played a key role in mediation efforts. Last year, Egypt brokered a truce which ended an 11-day war between Israel and Hamas in the Gaza Strip.
US President Joe Biden welcomed the cease-fire on Sunday, adding that he supports an investigation into reports of civilian casualties
He released a statement calling "on all parties to fully implement the cease-fire, and to ensure fuel and humanitarian supplies are flowing into Gaza as the fighting subsides."
Gaza's worsening humanitarian crisis
The humanitarian situation has been worsening in Gaza amid the latest flare up.
Gaza's hospital chief said injured people were arriving "every minute" at Shifa hospital in Gaza City. There's a shortage of medicine in Gaza, along with frequent power outages.
Israel closed its crossings with Gaza earlier this week due to security concerns. Gaza's sole power plant was forced to shut down due to a lack of fuel on Saturday.
Gaza's Health Ministry warned that medical services would cease on Tuesday due to a lack of electricity.
The UN said the electricity outages would also cause the water supply in Gaza to be interrupted, further exacerbating the humanitarian crisis.