A plane carrying 36 Arabs prisoners took off from Jerusalem shortly before 4 a.m., while another plane left Beirut, Lebanon, carrying kidnapped businessman Elhanan Tannenbaum and the bodies of three Israeli soldiers.
Under the German-mediated swap, expected to be completed later Thursday, Israel is to release 436 prisoners in exchange for the businessman and the soldiers' bodies. Most of the prisoners are Palestinians but the 36, including two Lebanese guerrilla leaders, are from other countries.
Israel will free 400 Palestinians into the West Bank and Gaza, turn over the remains of 59 Lebanese militants at the border with Lebanon and release the 36 non-Palestinian prisoners in Germany.
The deal boosts the Lebanese guerrilla group's standing in the region because of its success in freeing Palestinian prisoners, while Israel, besides the bodies and the businessman, wins its first pledge of concrete information about an airman captured in 1986 in Lebanon.
Earlier in Beirut, Hezbollah's Al Manar television showed film footage of Tannenbaum, the first such pictures of the businessman since he was seized in October 2000. The tape was aired shortly before Hezbollah took Tannenbaum to the plane.
The brief clip showed a man with graying hair folding clothes on a bed. The presenter said Tannenbaum was preparing to leave for freedom. It was not clear when the video tape was made or if Tennenbaum was under any extra duress.
"I have to say that the treatment I received was good, almost without exception, even very good," he said.
Tannenbaum's son, Uri, confirmed the man in the video was his father, adding "he's not looking well."
The Hezbollah guerrilla group announced that the three Israeli soldiers were dead only hours before it delivered them to a German air force plane at Beirut airport. The group had long refused to divulge the fate of the soldiers whom it captured on the Israeli-Lebanese border in 2000.
An Israeli forensics team, including Israel's chief pathologist, medics and rabbis, flew to Germany on Wednesday in preparation for the swap.
Positive identification is to set off the rest of the events.
Israeli military officials, speaking on condition of anonymity, said they received information that the bodies of the soldiers had been preserved in formaldehyde, which could speed up the identification process. The forensics team also brought along dental records and other evidence.
However, an Israeli military official warned that "complications could occur at any time."
The official, speaking on condition of anonymity, said the crucial stage would be after the planes reach Germany and the identification process begins.
Since Israel's founding in 1948, Israel has participated in several dozen prisoner exchanges with its Arab neighbors, many of them lopsided in the Arabs' favor. In 1985, Israel freed 1,150 Palestinians in exchange for three soldiers held in Lebanon.
There is opposition to this deal among both Israelis and Palestinians.
Some Israelis complain the price is too high and hands Hezbollah a victory that could help it destabilize the area.
Many Palestinians expressed disappointment with the deal, complaining that no prominent uprising figures are included. Also, most of the 400 were scheduled to be released this year.
"The Palestinians had hoped that the deal would include prisoners with long sentences, that it would include the sick, or those with life sentences," said Fadwa Barghouti, the wife of the most prominent Palestinian prisoner, Marwan Barghouti, on trial for his alleged role in attacks that killed 26 Israelis. He is not included in the deal.
In Berlin, Chancellor Gerhard Schroeder's spokesman, Bela Anda, declined to discuss details of the exchange. However, he said Germany "is thankful to be able to contribute to humanitarian progress here, to the extent that it is possible."
Israel scheduled a memorial service Thursday evening for the three soldiers upon their return. President Moshe Katsav, joined by Prime Minister Ariel Sharon and other senior officials, was to preside over the ceremony.
The soldiers, Beni Avraham, Adi Avitan and Omar Souad, captured in October 2000 after a Hezbollah roadside bomb hit their jeep during a patrol along the Lebanese border, are dead, Hezbollah said on its television channel Thursday.
The soldiers had been presumed dead, but their families had clinged to hopes that the men might somehow return alive.
Tannenbaum, who was also captured in October 2000 while conducting a questionable business deal in an Arab country, faces police and security service questioning. Israeli officials would say only that Tannenbaum's first stop would be a hospital for medical treatment. The former Israeli colonel was reportedly tortured in captivity.
After the swap is completed, the sides are to launch a second stage of negotiations. Israel is supposed to receive within three months concrete information about the fate of airman Ron Arad, who was shot down over Lebanon in 1986 and captured alive.
In exchange, Israel would release Samir Kantar, a Lebanese militant who has been in an Israeli prison since 1979 for killing three Israelis.
The most prominent Arabs being released are Lebanese guerrilla leaders Mustafi Dirani and Sheik Abdel Karim Obeid. They were kidnapped in 1994 and 1989, respectively, as bargaining chips for Arad.
Israel says Dirani held Arad captive at one point. Dirani, meanwhile, has filed a civil lawsuit in Israel, saying he was tortured shortly after he was abducted.
On Wednesday, Israel's Supreme Court rejected petitions by two Israeli groups opposed to the exchange, the Israeli newspaper Haaretz reported.