Footage from the ceremony showed the fighters, half of them women, queuing to place AK-47 assault rifles, bandoliers and other guns into a large grey cauldron.
Flames later engulfed the black gun shafts pointed to the sky as Kurdish, Iraqi and Turkish officials watched nearby.
The rebels, known as the PKK, had been locked in conflict with the Turkish state and outlawed since 1984 but decided in May to disband, disarm and end their separatist struggle after a public call to do so from its long-imprisoned leader Abdullah Ocalan.
After a series of failed peace efforts, the new initiative could pave the way for Turkey to end an insurgency that has killed more than 40,000 people, burdened the economy and wrought deep social and political divisions in the country and the wider region.
President Tayyip Erdogan said he hoped the PKK's dissolution would bolster Turkish security and regional stability.
"May God grant us success in achieving our goals on this path we walk for the security of our country, the peace of our nation and the establishment of lasting peace in our region," he said on X.
Friday's ceremony was held at the entrance of the Jasana cave in the town of Dukan, 60km northwest of Sulaymaniyah in the Kurdistan region of Iraq's north.
The fighters, in beige military fatigues, were flanked by four commanders including senior PKK figure Bese Hozat, who read a statement in Turkish declaring the group's decision to disarm.
"We voluntarily destroy our weapons, in your presence, as a step of goodwill and determination," she said, before another commander read the same statement in Kurdish.
Helicopters hovered overhead, with dozens of Iraqi Kurdish security forces surrounding the mountainous area, a Reuters witness said.
The ceremony was attended by Turkish and Iraqi intelligence figures, officials of Iraq's Kurdistan regional government and senior members of Turkey's pro-Kurdish DEM party - which also played a key role this year facilitating the PKK's disarmament decision.
It was unclear when further handovers would take place.
A senior Turkish official said the arms handover marked an "irreversible turning point" in the peace process while another government source said ensuing steps would include the legal reintegration of PKK members into society in Turkey and efforts to heal communities and promote reconciliation.
The PKK has been based in northern Iraq after being pushed well beyond Turkey's southeastern frontier in recent years.Â
Turkey's military carries out regular strikes on PKK bases in the region and established several military outposts there.
The PKK, DEM and Ocalan have all called on Erdogan's government to address Kurdish demands for more rights in regions where Kurds form a majority, particularly Turkey's southeast where the insurgency was concentrated.
In a rare online video published on Wednesday, Ocalan - whose large image was shown at the weapons ceremony - also urged Turkey's parliament to set up a commission to oversee disarmament and manage the broader peace process.
Turkey has taken steps toward forming the commission while the DEM and Ocalan have said that legal assurances and certain mechanisms were needed to smooth the PKK's transition into democratic politics.
Omer Celik, spokesman for Erdogan's AK Party, said the ceremony marked a first step toward full disarmament and a "terror-free Turkey," adding this must be completed "in a short time".
Erdogan has said the disarmament will enable the rebuilding of Turkey's southeast.
Turkey spent nearly $US1.8 trillion ($A2.7 trillion) over the past five decades combating terrorism, Finance Minister Mehmet Simsek has said.
