The delegation is led by senior Hamas official Ezzat al-Rishq, the sources said.
Egypt, the traditional broker in conflicts between Israel and Hamas, had invited Israeli and Palestinian negotiators to gather in Cairo to thrash out a durable truce in Gaza based on an Egyptian ceasefire proposal.
Israel, however, has said it will not send anyone to the talks.
"Hamas has proven that it breaches any agreement reached right away, as happened five times in previous truces," Israel's deputy foreign minister Tzahi HaNegbi said yesterday.
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Another Palestinian team, including the Palestinian Authority's spy chief Majid Faraj, arrived late on yesterday for the negotiations, which are expected to start later today.
Representatives of militant group Islamic Jihad are also expected in the Egyptian capital as is US Middle East envoy Frank Lowenstein and the Middle East Quartet's peace envoy Tony Blair.
The talks will focus on ways to end the conflict in Gaza, which has so far claimed more than 1,700 Palestinian lives and displaced up to a quarter of the territory's population.
The Palestinians are expected to press their demands for the end of an eight-year blockade of Gaza and the release of Palestinian prisoners.
Egypt's President Abdel Fattah al-Sisi said yesterday that an Egyptian truce plan provided a "real chance" to end the Gaza conflict.