Afghanistan's President Ashraf Ghani (centre) attends an Eid Al Fitr prayer at the presidential palace in Kabul. AP
Proposed by the militants and matched by President Ashraf Ghani, the truce will grant respite for Afghans as they mark the Muslim festival with friends and family.
Violence has intensified in the country since the United States missed a May 1 deadline, agreed with the Taliban last year, to withdraw all of its troops.
If the ceasefire holds, it will be only the fourth pause in fighting in nearly 20 years of conflict.
Early on Thursday, Afghan men, women and children around the country flocked to neighbourhood mosques or gathered in open grounds to offer morning prayers at the start of Eid festivities that would last until Saturday.
Muslim devotees pray to start the Eid Al Fitr festival during a three-day ceasefire agreed by the warring Taliban and Afghan forces on Thursday. AFP
Authorities deployed security personnel to several prominent mosques in the capital Kabul who frisked worshippers as they arrived for morning prayers.
"We want a permanent ceasefire. That will make us happier, as many more lives will be saved," said Amir Jan Sulaimankhil, a resident from Nangarhar province.
Ghani used his annual Eid address to urge the Taliban to agree to a lasting truce now international troops are leaving the country.
"We don't want you to surrender, but we want you to accept a political solution. War is not a solution," he said.
Tens of thousands of Afghans have been killed and millions have been displaced by the nearly two-decade-old conflict, which has seen a resurgent Taliban take hold of large swathes of the country.
The militants and the Afghan government launched peace talks in September last year, but progress has stalled despite international efforts to jump-start the negotiations.
Ceasefires in the past have largely held, in what is widely thought to be an exercise by the Taliban leadership to prove it has firm control over the myriad factions across the country that make up the hardline movement.
"He (Taliban chief Hibatullah Akhundzada) wants to show that he is the owner of the war and peace," said Afghan political analyst Fawad Kochai, based in Kabul.
There were no immediate reports of any violation of the ceasefire.
The Taliban on Monday denied agreeing to any ceasefire in Afghanistan after rumours swirled of a potential deal that would see a reduction in fighting after more than 18 years of war.
President Donald Trump made a surprise Thanksgiving visit to US troops in Afghanistan on Thursday and said he believed Taliban insurgents would agree to a ceasefire in America’s longest war.
The Taliban order, which was soon followed by an announcement via Twitter from Afghan President Ashraf Ghani announcing the government "extends the offer of peace," comes just days after US peace envoy Zalmay Khalilzad was in Kabul and Doha.
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Dubai’s Burj Khalifa wrote on Twitter, “Let us celebrate 50 glorious years of growth, progress and prosperity of our nation as we look forward to the next 50 years!” The Dubai International Airport also marked the national day celebrations at its premises.
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His Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice President, Prime Minister and Ruler of Dubai, His Highness Sheikh Mohamed bin Zayed Al Nahyan, Crown Prince of Abu Dhabi and Deputy Supreme Commander of the UAE Armed Forces, and their Highnesses the Rulers of the Emirates, Crown Princes and Deputy Rulers witnessed the official Golden Jubilee celebrations in Hatta on Thursday.