The hostages released are Yocheved Lifshitz, 85, and Nurit Cooper, 85, both residents of Kibbutz Nir Oz, Jerusalem Post reports. Both are Israeli citizens.
Israel confirmed the revived the hostages after Israeli security officials met them at the Rafah crossing.
Both of their husbands remain in captivity.
This comes after reports that an Israeli military official disclosed a deal was in the works for the release of around 50 dual citizen hostages in Hamas' control, focusing on women and children. Qatar and the United States are said to be heavily mediating the negotiations. It is unclear if the release of the two hostages is related.
"We decided to release them for humanitarian and poor health grounds..." Hamas said in a statement on its Telegram site.
This is a breaking story and will be updated.