The big screen is back in Jenin after a 23-year intermission, marking a fresh start for the West Bank city that was a bastion of armed militias at the peak of the Palestinian uprising against Israeli occupation.

Mothballed in the grim atmosphere of 1987, Jenin Cinema was finally reopened on Thursday evening with a screening of "Heart of Jenin", a wrenching documentary that spurred its renovation.

The film tells the story of Ismail Khatib, whose son was shot dead in 2005 by Israeli troops who mistook his toy gun for a real one. The traumatised father, in an unusual gesture of forgiveness, donated the boy's organs to Israeli patients.

"We rebuilt the cinema on Ismail's message: there is hope," said German director Marcus Vetter, who made the documentary.

"Heart of Jenin" had won numerous prizes, including Germany's Best Documentary award. But Vetter said he realised there was actually nowhere to show the film in Jenin itself.

On Thursday it was screened for 500 people at a gala reopening, in another milestone in the peaceful transformation of these once lawless streets near the border with Israel.

"I see my son Ahmed in all these faces," Khatib told the audience.

Prime Minister Salam Fayyad, who was among the guests, told Reuters: "This shows the determination of our people to close the chapter of despair and open the chapter of hope."

Competing militia groups swaggered around Jenin in their bandoliers during the hardcore days of the second intifada (uprising) that began in 2000. The late Palestinian leader Yasser Arafat used to call it "Jeningrad".

In 2002, Jenin witnessed one of the fiercest battles between Palestinian militants and Israeli troops, in which dozens were killed on both sides.

Today, Jenin is the prime example of a U.S.-backed policy that helped Palestinians build a professional security force to uphold the rule of law throughout the West Bank, as foreseen in the 1993 Oslo interim peace accords.

The town of 40,000 is bustling again, attracting Israeli Arab customers from across the border. Uniformed police in blue have replaced gunmen who once had the upper hand in the streets.

The German government provided 325,000 euros ($428,900) for the cinema's renovation, in addition to donations from Fayyad's government and local Palestinian businessmen.

It has two movie theatres, indoor and outdoor, plus a production company, a film school and a digital library of film music and books. The cinema will show Arabic and Hollywood feature films in future.

"Opening this cinema is an extraordinary thing. It is a reflection of reconciliation and peace," said Goetz Lingenthal, head of Germany's representative office in Ramallah.

"There is nowhere better than Jenin to show that achieving success is possible."