The three Israelis were led onto a stage on Saturday with Palestinian Hamas militants armed with automatic rifles standing on each side of them at the site in Khan Younis, live footage showed, before they were taken into Israel by Israeli forces.
Shortly afterward, the first bus carrying freed Palestinian prisoners and detainees departed Israel's Ofer jail in the Israeli-occupied West Bank, live footage showed.
The bus arrived in Ramallah to a cheering crowd, some waving Palestinian flags.
The swap of the three Israelis for the 369 Palestinians eased fears that the ceasefire agreement in effect since January 19 could collapse before the end of its 42-day first stage.
In what has become known as Hostage Square in Tel Aviv, people broke into cheers and tears when they heard the Red Cross was on its way to deliver the three to Israeli military forces in the Gaza Strip.
They appeared relieved to see the trio apparently in better physical condition than another three freed last week who appeared emaciated and weak.
US-Israeli Dekel-Chen, Russian Israeli Troufanov and Horn, whose brother Eitan was also abducted, were seized in Kibbutz Nir Oz, one of the communities around the Gaza Strip that was overrun by Hamas gunmen on October 7, 2023.
Some of the dozens of masked Islamist Hamas fighters deployed at the handover site carried rifles seized from the Israeli military during the October attack, Hamas sources said.
The hostages were made to give short statements in Hebrew on the handover stage in Khan Younis and militants presented one of them, Iair Horn, with an hourglass and photo of another Israeli hostage still in Gaza and his mother, reading "time is running out (for the hostages still in Gaza)".
Troufanov was abducted with his mother, grandmother and girlfriend - all of who were released in the brief November 2023 truce.
His father was killed in the attack on Nir Oz, where one in four people either died or were taken hostage.
On October 7, Dekel-Chen, 36, left his pregnant wife and two daughters in the family safe room to go out and fight the gunmen rampaging through the kibbutz.
Argentina-born Horn, 46, who managed the Nir Oz pub, was taken captive with his younger brother Eitan who was visiting that day.
Horn appeared to have lost considerable weight in captivity.
Nineteen Israeli and five Thai hostages have been released so far, with 73 still in captivity - about half of who Israeli authorities declared dead in absentia.
Hamas had threatened not to release more hostages after it accused Israel of violating the terms of the ceasefire by blocking aid from entering Gaza, drawing counter-threats of a resumption of fighting from Israel, which called up reservists and placed its forces on high alert.
Prospects for the ceasefire surviving have also been clouded by US President Donald Trump's call for Palestinians to be moved permanently out of Gaza, and for the enclave to be turned over to the US to be redeveloped.
That call was flatly rejected by Palestinian groups, Arab states and Western allies.
Hamas agreed in January to hand over 33 Israeli hostages, including women, children and sick, wounded and older men, in return for hundreds of Palestinian prisoners and detainees during a six-week truce during which Israeli forces would pull back from some of their positions in Gaza.
The truce was intended to open the way for a second phase of negotiations to return remaining hostages and complete the withdrawal of Israeli forces before a final end to the war and the rebuilding of Gaza, which now lies largely in ruins, facing shortages of food, running water and electricity.
Israel invaded the coastal enclave after the Hamas-led attack on communities in Israel on October 7, 2023, killing about 1200 people, according to Israeli tallies, and taking 251 as hostages.
The Israeli military campaign that followed has killed more than 48,000 Palestinians in Gaza, according to Palestinian health ministry figures, destroyed many of its buildings and left most of the population homeless.
