In a speech in Brussels, US President George W. Bush urged Abbas to offer a strategy for Palestinian reform at a London conference next month in order to draw international financial support.
Israel's prisoner release, its biggest since freeing 800 in 1996, was part of a package of confidence-building measures Abbas agreed with Prime Minister Ariel Sharon at a February 8 summit in Egypt.
But the mood of celebration was tempered by Palestinian demands for even larger prisoner releases to help Abbas get armed groups to formalise the cease-fire he reached with Sharon.
Israel still holds about 8,000 prisoners and says it will free 400 after a joint committee with the Palestinians finalises a roster.
Abbas vowed to make winning freedom for all jailed Palestinians the "top of our priorities", but Israel has refused to release prisoners "with blood on their hands".
"We feel pain because we left our brothers ... in jail," said Islamic Jihad member Hassan Abu Armana, who served two years in Israeli prisons. "There will be no peace, no security, no stability without the release of all prisoners."
The detainees were freed a day after Sharon's cabinet approved a pullout from the Gaza Strip, the first time Israel has decided to dismantle settlements on land Palestinians want for a state.
Palestinians welcomed the Gaza withdrawal, slated to begin on July 20, but were angry at Israel's simultaneous decision to endorse a route for a barrier looping deep into the West Bank to take in major settlement blocs near Jerusalem.
Israel says the barrier stops suicide bombers. Palestinians call it an attempt to grab land they want for a state.