Palestinian Islamic Jihad (PIJ) militants said the truce will begin at 23:30 local time (20:30 GMT), after talks moderated by Egyptian mediators.
Local media reports that an Israeli official has confirmed the ceasefire.
The latest violence is the most serious flare-up between Israel and Gaza since an 11-day conflict in May 2021.
The Israeli military said it began the latest attack on sites in the Gaza Strip in response to threats from a militant group. It followed days of tensions after Israel arrested a senior PIJ member in the occupied West Bank.
By Sunday evening, the Palestinian health ministry said that 15 children had been confirmed among the 43 deaths recorded in the latest violence. Gaza’s health ministry has blamed “Israeli aggression” for the deaths of Palestinians and the more than 300 people wounded.
Earlier on Sunday, rockets fired from Gaza reached Jerusalem for the first time since May last year.
The ceasefire was mediated by Egypt over the course of the day.
Large crowds gathered on Sunday for the funerals of those killed in strikes on Rafah, in the south of the territory, including senior PIJ commander Khaled Mansour – the second top militant to have died. Demonstrations in support of Gaza have also been held in the West Bank city of Nablus.
Reports of the ceasefire deal followed concerns over the humanitarian situation in Gaza, as health officials warned that hospitals only had enough fuel to run generators for another two days.
“We appreciate the Egyptian efforts that had been exerted to end the Israeli aggression against our people,” Islamic Jihad spokesman Tareq Selmi said.
Israel accused PIJ militants of accidentally causing at least some of those deaths – claiming on Saturday that the group fired a stray rocket killing multiple children in Jabalia, in the Gaza Strip. The BBC has not been able to verify this claim independently.
The latest conflict closely follows Israel’s arrest of Bassem Saadi, reported to be the head of PIJ in the West Bank, on Monday night.
He was held in the Jenin area as part of an ongoing series of arrest operations after a wave of attacks by Israeli Arabs and Palestinians that left 17 Israelis and two Ukrainians dead. Two of the attackers came from the Jenin district.
PIJ, which is one of the strongest militant groups operating in Gaza, is backed by Iran and has its headquarters in the Syrian capital Damascus.
It has been responsible for many attacks, including rocket-fire and shootings against Israel.
In November 2019, Israel and PIJ fought a five-day conflict following the killing by Israel of a PIJ commander who Israel said had been planning an imminent attack. The violence left 34 Palestinians dead and 111 injured, while 63 Israelis needed medical treatment.
Israel said 25 of the Palestinians killed were militants, including those hit preparing to launch rockets.