The demonstration, which was condoned by Hamas, showed how the long-bitter relations between the rival Palestinian factions have improved since an Israeli assault on the Gaza Strip in November.
While Friday's rally pointed to the improving ties between Hamas and Fatah, it also served as a reminder of the conflicts within Fatah that continue to dog the movement: Officials cancelled the event halfway through after 20 people were injured due to overcrowding, and shoving matches erupted between separate Fatah factions.
Yahiya Rabah, a top Fatah official in Gaza, said the rally was cancelled "due to the huge number of participants and logistical failures."
But witnesses said one pushing match was between supporters of Palestinian President Mahmoud Abbas and partisans of former Fatah's former Gaza security commander Mohammed Dahlan, who was expelled from the party because of conflicts with Abbas.
Another Fatah official, who spoke anonymously because he did not want to embarrass the party, said the rally was cancelled because hundreds of Dahlan supporters jumped up on the stage and clashed with Abbas supporters.
Fatah spokesman Fayez Abu Etta attributed the injuries to overcrowding and the excitement of the rally.
Overnight, throngs had camped out in a downtown Gaza square to ensure themselves a spot for the anniversary commemoration of Fatah's 1965 founding, and tens of thousands marched early Friday carrying Fatah banners. When the rally began, people stampeded to the stage to try to shake leaders' hands.
Hamas was not directly involved in the event but allowed it to take place. Top Fatah officials arrived in Gaza for the first time since they were ousted from Gaza by Hamas in 2007.
Abbas, who rules in the West Bank, did not attend the event, but spoke to the crowd via a televised address, telling them that "there is no substitute for national unity."
Organizers then ended the rally, cancelling the other planned speeches and musical performances.
Hamas has gained new support among Palestinians following eight days of fighting with Israel in November, during which Israel pounded the seaside strip from the air and sea, while Palestinians militants lobbed rockets toward the Israeli cities of Jerusalem and Tel Aviv for the first time.
Following the fighting, relations have thawed somewhat between Hamas and Fatah. Hamas was allowed to hold its first West Bank rallies since the 2007 split in which Hamas seized Gaza and Fatah was left in control of the West Bank. Hamas returned the favor Friday by allowing the Fatah rally.
Senior Fatah official Nabil Shaath said the party received a congratulatory message from Hamas Prime Minister Ismail Haniyeh, who expressed hope that the two factions could reconcile their differences and work together as joint representatives of the Palestinian people.
"This festival will be like a wedding celebration for Palestine, Jerusalem, the prisoners, the refugees and all the Palestinians," Shaath said.
Reconciliation between the two factions, however, is still far from a done deal. Hamas chief Khaled Mashaal, considered more pragmatic than Hamas' Gaza-based hardline leaders, forged a reconciliation agreement with Abbas in 2011.
But the Gaza-based leadership, unsupportive of the deal, has held up implementing it. Fatah enjoys Western support and has been pressured not to forge a unity agreement with the militant Hamas - facing a potential cutback in foreign aid if it does. Hamas has carried out hundreds of deadly attacks against Israeli citizens and is regarded by the U.S. and Israel as a terrorist organization.
Fadwa Taleb, 46, who worked as a police officer during the previous rule of Fatah, gathered at the rally with her family. "We feel like birds freed from our cage today," Taleb said. "We are happy and feel powerful again."
A Gaza security official said a Fatah-linked former aide to the late Palestinian leader Yasser Arafat died of a heart attack in the square overnight, saying he was shocked by the large crowd that was allowed to gather.
In the West Bank, Palestinian President Abbas signed a presidential decree changing the name of the Palestinian Authority to the "State of Palestine," following the Palestinians' upgraded status at the United Nations as a non-member observer state.
According to the decree, reported by the official Palestinian news agency Wafa Thursday night, all stamps, signs, and official letterhead will be changed to bear the new name.
It is the first concrete, albeit symbolic, step the Palestinians have taken following the November decision by the United Nations. Abbas has hesitated to take more dramatic steps, like filing war crimes indictments against Israel at the International Criminal Court, a tactic that only a recognized state can carry out.
