All students, from kindergarten to the 12th grade, returned to schools, the education ministry said in a statement. The "capsules," learning in small groups, were cancelled, the ministry said, Xinhua news agency reported.
The students and teachers still have to wear masks in class.
The mandatory mask-wearing in public spaces was cancelled in the wake of a low number of diagnosed cases, the health ministry said in a statement.
"The masks are intended to protect us from the coronavirus. After professionals decided this was no longer required in open spaces, I decided to enable taking them off," Health Minister Yuli Edelstein said in the statement.
Israelis still have to wear masks in indoor spaces, such as supermarkets.
Israel launched a national vaccination campaign in December, 2020. Over 53 per cent of the country's 9.3 million citizens have received both shots of the Pfizer vaccine.
As of Sunday, Israel has recorded a total of 836,926 cases and 6,334 death since the beginning of the pandemic in February 2020, according to official figures.