The accord will mean all but one district of the city in central Syria, once dubbed the "capital of the revolution", will be back under government control in the runup to elections.
In Hama province to the north, meanwhile, 12 children were among 20 people killed in two bombings targeting towns mostly populated by Alawites, the offshoot of Shiite Islam to which President Bashar al-Assad belongs.
And Al-Qaeda leader Ayman al-Zawahiri called in a new audio recording for the group's Syrian wing to end fighting with the rival jihadist Islamic State of Iraq and the Levant (ISIL).
In Homs, a ceasefire took effect in the Old City and several rebel-held districts to allow the withdrawal of almost 1,200 fighters, the Syrian Observatory for Human Rights said.
"A truce began on Friday... with the goal of applying a deal reached between the sides," the Britain-based monitoring group said.
"The deal stipulates a ceasefire and the withdrawal of the rebels in the Old City," which has been under siege for two years.
Observatory head Rami Abdel Rahman said negotiations were continuing and that no withdrawal was expected on Friday night, with the ceasefire likely to be extended beyond an initially agreed 24 hours.
Militants said the talks between representatives of the warring parties centred on whether the rebels would be allowed to pull out with their weapons.
The agreement comes after government forces began an assault against the few remaining rebel-held areas in the city last month.
Regime troops have laid siege to the Old City and a few surrounding areas for almost two years, with nearly 3,000 people trapped under blockade as food and medical supplies dwindled.
In February, a UN-Red Crescent operation evacuated around half of those trapped, and several hundred more have left since.
In Hama province, meanwhile, state media said 20 people including 12 children were killed in the Alawite towns of Jidrin and Al-Humairi.
The attacks, in which suicide bombers blew themselves up in vehicles, came after a double car bombing killed 100 people in an Alawite district of Homs on Tuesday.
Despite the violence, the government plans to hold a presidential election next month that is expected to sweep Assad to victory.
It will be the country's first multi-candidate presidential vote, after a constitutional amendment did away with referendums.
The government has not explained how it will organise countrywide elections with violence that has killed more than 150,000 people ravaging much of Syria since March 2011.
Large swathes of the country are beyond government control and the violence has forced nearly half of the population to flee their homes.
- 'Wounded Iraq' -
Since early January, mainstream and Islamist rebels, along with Al-Qaeda affiliate Al-Nusra Front, have been battling against ISIL, which has been accused of kidnapping, torturing and killing activists and rival rebels.
ISIL has its roots in Al-Qaeda's Iraq arm, but it has since fallen out with the global terror organisation's central leadership, which has repeatedly called on it to leave Syria and focus on Iraq.
But in a recording posted online on Friday, Zawahiri for the first time ordered Al-Nusra's chief Mohammed al-Jolani to end fighting with ISIL and any other jihadist groups.
Zawahiri also renewed his call for ISIL to leave Syria, urging the group's chief Abu Bakr al-Baghdadi to "devote himself to wounded Iraq, which needs you to redouble your efforts" there.
The head of the US Federal Bureau of Investigation meanwhile said he was "determined" to keep any 9/11-type scenario from growing out of Syria, as more foreign fighters flock to the conflict.
FBI Director James Comey compared the civil war in Syria to Afghanistan in the 1980s and 90s, when fighters there eventually formed Al-Qaeda and declared war on the United States, leading to the September 11, 2001 attacks.
"All of us with a memory of the 80s and 90s saw the line drawn from Afghanistan in the 80s and 90s to September 11. We see Syria as that but an order of magnitude worse," Comey told a group of reporters at FBI headquarters.
He spoke of a growing trend that has seen dozens of Americans and thousands of Europeans travel to Syria to take up arms.
Faced with setbacks on the battlefield, Ahmad Jarba, the head of the Syrian opposition in exile, is to start a visit to the United States on Wednesday seeking sophisticated weapons for rebels, his office said.
It said he would be accompanied by the new chief of staff of the rebel Free Syrian Army, Brigadier General Abdelilah al-Bashir.
In Britain, Foreign Secretary William Hague announced London would resume delivering non-lethal aid to Syria's opposition that was suspended last year.
The suspension came after Islamist rebels captured an arms depot and a border crossing with Turkey from the FSA in December.