Ethiopian Prime Minister Meles Zenawi's spokesman said the withdrawal would take several days.
A convoy of about 30 Ethiopian vehicles loaded with troops and equipment left the Somali capital, Mogadishu.
Hours earlier a roadside bomb killed two Ethiopian soldiers and a number of civilians died when troops opened fire.
"The withdrawal of our troops from Somalia has entered the implementation phase," Bereket Simon, special adviser to the Ethiopian premier, told Reuters news agency.
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