The West Bank-based Palestinian Authority, or PA, hopes the symbolic inclusion of the Gazan city of Deir al-Balah will reinforce its claim to authority over the territory from which it was ousted by Hamas in 2007.
Gazans, who are struggling to meet their basic needs in the devastated enclave, welcomed the opportunity to vote on Saturday.
"As a Palestinian and a son of the Gaza Strip, I feel proud that after this war the democratic process is returning," said voter Mamdouh al-Bhaisi, 52, at the Deir al-Balah polling station.
Since a US-brokered ceasefire in Gaza between Hamas and Israel took effect in October, intermittent talks led by the United States have made little progress towards a settlement that envisages international supervision of Gaza.
European and Arab governments broadly support an eventual return of Palestinian Authority governance in Gaza, and the establishment of an independent Palestinian state comprising Gaza, East Jerusalem and the West Bank, where the Palestinian Authority exercises limited self-rule under Israeli occupation.
Western diplomats say local elections could be a step towards the first national elections in nearly two decades and advance reforms to increase transparency and accountability that the PA says are under way.
"We hope that the procedure carried out today will be crowned with legislative and presidential elections," said Munif Treish, one of the candidates in the West Bank.
They are the first Palestinian elections to be held since the Gaza war started more than two years ago with the cross-border Hamas assault on southern Israeli communities.
Municipal elections were last held in the West Bank four years ago.
In Deir al-Balah, which has suffered less damage from Israel's assault since 2023 than other Gazan cities, banners bearing candidate lists hang from buildings.
Some voting took place in tents and the process will end two hours early due to electricity constraints.
The Palestinian election committee cited widespread destruction among the reasons voting could not be held across the rest of Gaza, more than half of which is controlled by Israel with the rest under Hamas rule.
Some Palestinian factions are boycotting the elections in protest at the PA's request that candidates back its agreements, which include recognition of the state of Israel.
Hamas, which has ruled Gaza for nearly two decades, has not formally nominated any candidates.
Most candidates, including in the West Bank, are running under Fatah, the main political movement behind the PA, or as independents.
Hamas has said it will respect the results.
The Palestinian Central Elections Committee said more than one million Palestinians, including 70,000 in Gaza, are eligible to vote, with results expected late on Saturday or on Sunday.
