Fatah officials said Palestinian cabinet minister Qaddura Faris, a member of the faction, visited al-Barghuthi in prison on Friday to try to dissuade him from challenging its presidential nominee, former prime minister Mahmud Abbas.
There was no immediate word on whether Faris persuaded al-Barghuthi to change his mind.
"The door before Marwan is closed now, after the decision of the Fatah Central Committee to nominate [Abbas]," said Hatim Abd al-Qadir, a Fatah official and legislator.
"If he runs as independent candidate, Fatah will lose votes to other factions and this also may create divisions inside the movement," Abd al-Qadir said.
Fatah officials said on Thursday that al-Barghuthi, 45, had decided to run in the 9 January election to choose a successor to the late Yasir Arafat, but an official announcement would be made only after further consultations.
Aljazeera's Ram Allah correspondent Shirin Abu Akla, however, said it had not been confirmed that al-Barghuthi was intending to run and outlined that Faris's visit would shed light on the issue.
Abbas is Fatah's official
nominee for president
Al-Barghouthi's candidacy could throw the election wide open and pose a dramatic challenge to Abbas, 69, now caught in the glare of the charismatic al-Barghuthi's popular appeal with Palestinians.
As an independent candidate, he could score many votes inside and outside the movement particularly among youths. It was his particular influence among the younger cadre of Palestinian movements that prompted a move to convince him to renege on including his candidacy, Abu Akla said.
A behind-bars bid to succeed Arafat could also bring international pressure on Israel to free al-Barghuthi, sentenced in June by an Israeli criminal court to five life terms after it convicted him of involvement in the killings of Israelis.
At his trial in Tel Aviv, al-Barghuthi said he was a political leader with no involvement in violence.
Abbas, who took over the umbrella Palestine Liberation Organisation after Arafat's death on 11 November, is favoured as a future peacemaker by Israel and the United States.
Before heading to southern Israel to see al-Barghuthi, Faris met Abbas, who Abd al-Qadir said repeated a promise to press the Israeli government to release him.
A senior Fatah official said Abbas could also persuade al-Barghuthi to stand down by promising to hold internal elections within the faction, the largest in the PLO, to give its "young guard" a stronger voice.
"If [al-Barghuthi] runs as independent candidate, Fatah will lose votes to other factions and this also may create divisions inside the movement"
Hatim Abd al-Qadir,
Fatah official and legislator
Al-Barghuthi was the main voice of a revolt for an independent Palestinian state after peace negotiations collapsed in 2000 and has long been seen as a potential successor to Arafat.
Palestinian political analysts predicted he would stand a good chance of winning the ballot, drawing support from mainstream voters as well as from Islamists who oppose Abbas's call to end the uprising.
Passionate and articulate, the bearded and diminutive al-Barghuthi has also advocated peace with Israel, making his case for an end to occupation in the West Bank and Gaza in near-perfect Hebrew learned during previous jail stints.