Georgia said on Friday its troops had withdrawn after seizing strategic ground in a rebel territory, in a move sure to be welcomed by Washington alarmed at a drift toward war in an economically vital region.
But tension remained high in South Ossetia following Thursday's military action, also watched anxiously by Russia, Georgia's giant neighbor.
South Ossetia's separatist leadership dismissed the Georgian pullback as a "theatrical gesture."
"The night passed off peacefully. The high ground occupied the day before by our units has been handed over to the peacekeeping contingent deployed there," Aleko Kinkadze, commander of the Georgian peacekeepers, told Reuters.
Russia and the United States have welcomed Georgia's decision to pull back its troops from the separatist republic of South Ossetia.
Russia's ambassador at large Lev Mironov said Moscow is "happy" to see the implementation of earlier demilitarization demands made by the joint commission in charge of monitoring the 1992 Georgian-South Ossetian peace treaty.
Talking to reporters in Tbilisi today, Mironov said Russian, Georgian, and Ossetian peacekeepers were now taking over positions left by Georgia's Interior Ministry troops, says Radio Free Europe / Radio Liberty.
But Georgian troops leaving the region, interviewed by AFP, wanted to press on into South Ossetia instead of being pulled back, fulfilling the new leadership's dream of winning hold over the fractured former Soviet republic, split up by ethnic strife.
"It's a mistake that we are being pulled back. If a war starts, we will never be able to make it back in. We cannot trust these negotiations," said David Hubuluri, a deputy colonel in the Georgian army who was seeing his troops pulled out of Ossetia, reported Channel News Asia.
South Ossetia wants to integrate into neighboring Russia while Georgian President Mikhail Saakashvili has pledged to reunite the country by taking the region and another breakaway republic, Abkhazia, back under the control of the central government.
The simmering tensions between Tbilisi and South Ossetia erupted in late May when Saakashvili briefly sent troops into the region, informed Xinhuanet.
Georgian President Mikhail Saakashvili says the pullout from South Ossetia is meant "to give peace a final chance." For the past week, South Ossetia and Georgia have been teetering on the brink of war.
Whereas the Georgian government maintains that the death-toll in the recent heavy fighting has been limited, other sources like the Dutch ecumenical organisation IKV, which maintains daily contact with its Georgian sister organisation, have reported at least 140 people killed.
In recent weeks, Tbilisi has repeatedly requested international mediation to end the conflict, told RNW.