The prisoners arrived at Beitunia, near the West Bank city of Ramallah, after a short drive from Ofer prison outside Jerusalem. The prisoners, some waving black-and-white checkered keffiyeh headdresses as they got out of Israeli buses, kissed the ground before boarding Palestinian vehicles.
Israel said the release is a gesture meant to bolster moderate Palestinian President Mahmoud Abbas and give a boost to the slow-moving peace talks with the moderate Palestinian leader.
CBS News correspondent Robert Berger said Israel hopes the move will lend the peace process a boost to coincide with Rice's visit. The Secretary of State is continuing to push for a peace agreement by the end of the year - a goal set by President Bush.
"It's not easy for Israel to release prisoners. Some of the individuals being released today are guilty of direct involvement in the murder of innocent civilians," government spokesman Mark Regev said. "But we understand the importance of the prisoner issue for Palestinian society ... We believe this action can support the negotiation process and create goodwill."
The fate of the roughly 9,000 Palestinians in Israeli jails is highly emotional, since many Palestinians either know someone in prison or have served time themselves. Abbas, who is struggling to show his people the fruits of the peace talks, has repeatedly urged Israel to carry out a large-scale release.
The Israeli government approved the release last week. Among the 198 men freed Monday was Said al-Atba, who has served 32 years of a life sentence for carrying out a deadly market bombing three decades ago.
Al-Atba, 57, was the longest serving inmate held by Israel and he is widely seen by the Palestinian public as a symbol of all the prisoners. Balding, with a mustache, he made a victory sign toward cameras as two Palestinian officials escorted him to a car. Others rushed to greet him, kissing him on both cheeks.
His brother Hisham traveled from Saudi Arabia, where he works, to join the hundreds of Palestinians waiting to greet the prisoners at Beituniya.
"I feel great, great joy," he said. "We had lost hope that my brother would be released because he's been in prison for 32 years."
Al-Atba's sister, Raida, said she had prepared her brother's favorite food, stuffed vine leaves and zucchini.
In nearby Ramallah, where the prisoners were scheduled to receive an official welcome from Abbas, hundreds of Palestinians from all over the West Bank waited to greet them, under a giant poster with pictures of Abbas, al-Atba and another veteran prisoner being freed, Mohammed Abu Ali, a lawmaker from Abbas' Fatah party.
Abu Ali was jailed in 1980 for killing an Israeli settler in the West Bank and later convicted of killing a Palestinian in jail he accused of collaborating with Israel.
Israel has released prisoners to Abbas in the past, most recently last December. But it has balked at releasing Palestinians serving time for deadly attacks. It appears to be easing its criteria following a prisoner swap last month with the Lebanese guerrilla group Hezbollah. Under that deal, Israel exchanged a Lebanese man convicted in a notorious triple murder for the remains of two Israeli soldiers.
Eager to bolster Abbas in his rivalry with Hamas, Israel says the latest release is meant to show the Palestinians that dialogue, not violence, is the best way to win concessions.
Hamas is demanding the release of hundreds of prisoners in exchange for an Israeli soldier captured by Palestinian militants in a cross-border raid two years ago. The soldier is being held in the Hamas-controlled Gaza Strip.
The prisoner release came hours before the arrival of Rice, who has been mediating the negotiations between Israel and Abbas' government. The talks had aimed for an agreement by the end of the year, but both sides have acknowledged that it is.