The move has been met with thanks from Israel.
It is the first substantial Palestinian-Israeli cooperative to crack down on cross-border violence under the freshly elected Palestinian Authority President Mahmoud Abbas.
Foreign Minister Nabil Shaath said the deployment could be a first step toward a wider return of Palestinian security control in their areas of Gaza and the West Bank.
The initiative followed a meeting between the two sides where Israeli Defence Minister Israeli Shaul Mofaz approved the deployment and agreed not to attack any of the Palestinian security forces.
Eventually the number of Palestinian security forces in the region will grow to 2,500 and will patrol the flashpoint Jabaliya refugee camp and the town of Beit Hanun.
Both have been frequent launch pads of rocket attacks on Jewish settlements and the southern Israeli town of Sderot.
The prospect of Palestinian police taking action to rein in militants has quelled calls in Israel for immediate military action to stop raids by Palestinian militants.
“We are witnesses today of the beginning of positive developments from the Palestinian side, showing that they understand more and more that terrorism does not pay,” said Israeli army chief of staff General Moshe Yaalon.
Analysts say a period of calm between the two sides could lead to a resumption of peace talks, starting with coordination of Israel’s planned pullout from Gaza in the summer.
But renewed violence would likely trigger an Israeli military offensive, already approved by Israeli leaders.
In September 2000, renewed attacks from Palestinian militants saw Israel send troops into the West Bank and Gaza, retaking areas handed over to the Palestinians under interim peace deals.
Palestinian leader Mahmoud Abbas has been holding talks with leaders of the armed factions to try to get them to halt their assaults on Israel.
Leaders of both Hamas and its smaller rival Islamic Jihad have said talks with Abbas have been “positive” and pledged to study his call for a ceasefire after previously saying they were opposed to such a move.
In further signs of easing tensions, Israel agreed to lift its blockade of the main trans-Gaza highway as well as reopen the Rafah border crossing between Gaza and Egypt from Friday.
It had been closed for the past six weeks after a suicide attack.
Despite the diplomatic progress, violent incidents continued.
A 13-year-old boy was shot and killed by Israeli soldiers who claim he fired a homemade rifle at them near the West Bank village of Tubas.
Israeli troops also shot and killed another 13-year-old boy in the Rafah refugee camp in southern Gaza.
The military said soldiers fired at two suspicious Palestinians crawling in a no-go zone.