Ukraine, Russia and the Kremlin-backed separatists signed a ceasefire deal after five months of bloodshed, and Europe prepared additional sanctions on Moscow.
The head of Ukraine's national guard says the ceasefire appears to be holding despite some violations early on.
Meanwhile Nato leaders created a new force designed to prevent any aggression by Russia against alliance members.
Gunfire and shelling appeared to fall silent across eastern Ukraine shortly after the appointed hour, to the relief of war-weary residents. But the US voiced scepticism that the rebels and Russia would stop violating Ukrainian sovereignty.
Ukrainian President Petro Poroshenko said he ordered his forces to halt hostilities at 6pm local time after the deal was signed in Minsk, the Belarusian capital, by all three sides and a representative of the Organisation for Security and Co-operation in Europe (OSCE).
Separatist leaders also said they ordered their forces to hold their fire.
Mr Poroshenko said the ceasefire was based on an agreement reached during a “long conversation” with Russian President Vladimir Putin and would be watched over by international monitors from the OSCE.
The negotiators also agreed on the withdrawal of all heavy weaponry, the release of all prisoners and the delivery of humanitarian aid to devastated cities in eastern Ukraine, Heidi Tagliavini of the OSCE said.
Mikhail Zurabov, the Russian ambassador to Ukraine who also signed the deal, described the exchange of lists of more than 1,000 prisoners from each side as a “breakthrough.” Mr Poroshenko said a prisoner exchange could begin as early as today.
Mr Putin’s spokesman, Dmitry Peskov, said the Kremlin welcomes the signing and hopes that all sides will fulfil the agreements and continue the negotiation process “for the full settlement of the crisis in Ukraine”.
US President Barack Obama said he was hopeful the ceasefire would hold but sceptical that the rebels would follow through and that Russia would stop violating Ukraine’s sovereignty and territorial integrity.
“It has to be tested,” he said at the close of a two-day Nato summit in Wales.
Noting that the US and Europe were finalising even tougher sanctions on Moscow, Mr Obama said the most effective way to ensure the ceasefire’s success was to move ahead with those measures in hopes of keeping up the pressure on Russia.
German Chancellor Angela Merkel said “if certain processes get under way, we are prepared to suspend sanctions” against Russia.
“We have to see whether this ceasefire is being applied. Do Russian troops withdraw, so far as they’re there?” she said.
Keeping the pressure on Moscow, EU ambassadors gave preliminary approval to new Ukraine-related sanctions on Russia involving access to capital markets and trade in arms and defence technology, dual-use goods and sensitive technologies.
More people will also be added to the trade bloc’s entry ban and asset freeze. Final approval is expected on Monday, with the new measures probably taking effect on Tuesday.
The talks revealed divisions and uncertainty in the rebel ranks.
Alexander Zakharchenko, the separatist leader from the Donetsk region, said he was “very pleased and happy that we managed to take the first steps to change the military situation into a political discussion”.
His counterpart from the Luhansk region, Igor Plotnitsky, was less enthusiastic. While saying the talks showed that “we can deal with Kiev,” he described the conflict as between “one people divided by ideology”.
Mr Plotnitsky said the Luhansk separatists had to agree to the ceasefire to save lives, but he warned that they had not abandoned their “course for secession”.
Ukraine, Nato and Western nations have accused Russia of backing the separatists with weapons, supplies and thousands of regular troops.
Moscow has denied this, but a Nato military officer told The Associated Press that the number of Russian soldiers directly involved in the conflict has grown past the alliance’s earlier estimate of at least 1,000.
UN Secretary-General Ban Ki-moon welcomed the truce agreement and encouraged the contacts between Mr Poroshenko and Mr Putin to continue. He stressed that “credible and comprehensive monitoring and verification are essential” to the success of the ceasefire and peace plan.
Since the fighting began in the east in mid-April, nearly 2,600 people have been killed and hundreds of thousands have fled their homes, according to UN estimates.
Nato leaders at the summit also approved plans to create a rapid response force to counter Russian aggression, with a headquarters in Eastern Europe that could quickly mobilise if an alliance country were to come under attack.
Ukraine is not a Nato member, but the entire alliance has been alarmed by Russia’s actions in Ukraine, and Russia is under both US and EU sanctions for its support of the rebels.
“It sends a clear message to any potential aggressor: Should you even think of attacking one ally, you will be facing the whole alliance,” Nato Secretary-General Anders Fogh Rasmussen said.
A rebel offensive in south-eastern Ukraine in the last two weeks has turned the tide of the war against Ukrainian forces, who until recently had appeared close to crushing the rebellion.
Yesterday morning, AP reporters heard heavy shelling north and east of Mariupol. The city of 500,000 people lies on the Sea of Azov, between Russia and the Crimean Peninsula, which Russia annexed in March. The shelling appeared to indicate that rebels had partially surrounded the area.
Seizing Mariupol would give the rebels a strong foothold on the coast and raise the threat that they could carve out a land corridor between Russia and Crimea.