The exchange of 118 Houthis and 76 pro-Hadi forces, will raise hopes that a ceasefire declared in April may be taking hold in Yemen's third largest city after repeated violations by both sides, Reuters reported.
Fighting between the Houthis and supporters of Mansour Hadi has eased in much of Yemen since they announced the truce before the start of UN-sponsored peace talks in Kuwait.
But the fighting has continued in Taiz, with neither side able to extend control over the entire city. A rocket attack there in early June killed 12 civilians and wounded more than 122 others after it hit a busy market.
The conflict in Yemen has raged since March 2015, when a Saudi-led alliance intervened to try to restore Hadi to power.
The talks in Kuwait have made little progress towards ending the war, which has killed more than 6,200 people and displaced more than 2.5 million, causing a severe humanitarian crisis.
More than 14 million Yemenis, more than half of the country's population, are in need of emergency food and life-saving assistance, according to a report this month by the United Nations and the Yemeni government.