The swap is taking place at a check point near the industrial town of Horlivka in the Donetsk region
Ukrainian government forces and pro-Russian separatists in eastern Ukraine have started an all-for-all prisoner swap, after which all remaining prisoners of the five-year conflict should return home, the office of Ukraine's president said on Sunday.
The agreement was concluded by Russian leader Vladimir Putin and Ukrainian President Volodymyr Zelenskiy in Paris in December.
The swap is taking place at a check point near the industrial town of Horlivka in the Donetsk region.
Russia's RIA news agency, citing a local official from the self-declared Donetsk People's Republic, said Kiev would hand over 87 separatists, while Donetsk would return 55 pro-central government fighters.
Kiev's forces have been battling separatists in the Donbass region of eastern Ukraine since 2014 in a conflict that has claimed more than 13,000 lives. Sporadic fighting continues despite a ceasefire agreement.
There have been several prisoner exchanges between Kiev and the rebels. In the last swap, conducted in December 2017, Ukraine handed over about 300 captives to pro-Russian separatists and took back around 70.
Relations between Ukraine and Russia collapsed following Moscow's annexation of the Crimean peninsula in 2014, and its subsequent support for separatists in the eastern Donbass region.
President Zelenskiy won a landslide election victory in April promising to end the conflict.
Widely criticized domestically for his plan to grant special status to Donbass to help end the five-year conflict, Zelenskiy's latest actions have given rise to cautious optimism.
In September, after a carefully negotiated rapprochement, Russia and Ukraine swapped dozens of prisoners. The move brought Western praise and hopes that relations between Moscow and Kiev could thaw.
The released Ukrainians included sailors detained by Russia during a clash in waters off Crimea last year, and filmmaker Oleg Sentsov, jailed in Russia.
The meeting of Ukrainian, Russian, German and French leaders earlier this month in Paris renewed optimism for a resolution to the conflict, and confirmed the relevance of an early peace agreement signed in Belarusian capital Minsk in 2015.
Relations between the two countries are also unlikely to be aggravated by a dispute in the gas sector, where Kiev and Moscow are arguing about a new transit contract to replace the current agreement which expires at the end of the year.
Ukraine has repeatedly accused Russia of using natural gas supplies to put pressure on the neighboring state, but last week the parties managed to agree on the main points of a new deal.