Ukraine's army and Moscow-backed separatists on Saturday (November 9) launched the last phase of a troop pullback.
The long-awaited withdrawal of troops in the conflict-riven Donetsk and Lugansk regions is a precondition for the first face-to-face talks between Russian President Vladimir Putin and his Ukrainian counterpart, Volodymyr Zelensky.
The Paris summit, whose date has yet to be confirmed, will be mediated by the leaders of France and Germany.
OSCE monitors were observing the disengagement, which could take several days.
"Shortly after 12:00 (Eastern European Time) on 9 November, the SMM [Special Monitoring Mission into Ukraine] observed the beginning of the disengagement process at the Petrivske disengagement area," OSCE monitors said in a statement.
"The Mission will continue to monitor and verify the disengagement process," the statement added.
"The disengagement of troops and weaponry has begun" between the villages of Petrivske in the separatist-controlled zone and Bogdanivka in Kyiv-controlled territory in the Donetsk region, said a senior Ukrainian army representative, Bogdan Bondar.
Donetsk separatists also confirmed the start of the withdrawal of forces.
The warring sides signalled their intention to withdraw by firing flares, the OSCE said. A similar pullback took place in the Lugansk region in October.
Since coming to power in May, comedian-turned-president Zelensky has sought to establish dialogue with Putin and revive a peace process to end the five-year-old separatist conflict.
The war in eastern Ukraine broke out a month after Moscow annexed the Crimean peninsula from Ukraine in 2014 and has claimed some 13,000 lives.
Ukraine and its Western allies accuse Moscow of giving financial and military backing to separatists, which Russia denies.
The Normandy format aims to renew dialogue, which can bring us closer to the complete end of the war," Zelensky said this week, referring to the four-way talks.
The summit has been repeatedly postponed for a number of reasons including the failure of earlier attempts to disengage forces.
The withdrawal of forces would be the "final precondition" for organising the four-way summit, Ukraine's Foreign Minister Vadym Prystaiko said this week.
He has expressed hope that the meeting, the first at such a high level since 2016, could take place in Paris in November.
Russia has said it backs a new summit but refused to commit to a timetable.
"We want to hold the summit as soon as possible, but at the same time we consider this summit has to be well organised to ensure it gets the necessary results," Kremlin spokesman Dmitry Peskov said.
He added it was "too early to say" whether the meeting could take place this year because "many questions" remained unresolved.
Zelensky faces criticism at home
Zelensky's peace plan including the troop pullback has been strongly criticised by many in Kyiv, especially war veterans and nationalists.
In the run-up to the planned summit, Ukrainian, Russian and separatist negotiators also agreed on a roadmap that envisages a special status for the separatist territories if they conduct free and fair elections under the Ukrainian constitution.