Israel's security cabinet has approved a deal that will free 25 Egyptian prisoners in exchange for a U.S.-Israeli citizen jailed in Egypt on charges of spying.
Government officials say the cabinet unanimously endorsed the prisoner swap on Tuesday.
The exchange is expected to take place on Thursday.
Ilan Grapel, who apparently entered Egypt in January, has been jailed since June. Egypt alleges he engaged in espionage activities in connection with the popular revolt that toppled former President Hosni Mubarak, although formal charges were never filed.
Israel insists Grapel, 27, is not a spy and has no ties with Israeli or U.S. intelligence services.
The office of Israeli Prime Minister Benjamin Netanyahu says none of the 25 Egyptians being released is considered a security risk.
The exchange, announced on Monday, is seen as an attempt to improve relations between Israel and Egypt that have been strained since President Mubarak's ouster in February. Egypt and Israel established diplomatic ties in 1979.
The swap comes after an Egyptian-mediated deal between Israel and Hamas that freed captive Israeli soldier Gilad Shalit in exchange for more than 1,000 Palestinians held in Israeli jails.
Grapel, a student at a U.S. law school, was interning for a non-profit group in Egypt when he was arrested.
Some information for this report was provided by AP and Reuters.