Officials said the new cabinet will see key supporters of Palestinian Authority President Mahmud Abbas forming his inner circle.
A new government list had been expected since Abbas was elected in January to succeed the late Yasir Arafat on a platform of peacemaking and reform, but insiders said it was held up by disagreements between Abbas and Prime Minister Ahmad Quraya.
As Fatah has a two-thirds majority in the Palestinian Legislative Council, the new government list is expected to be passed later on Monday.
Major-General Nasir Yusuf, who played a big role in a crackdown on fighters in the 1990s, was named as interior minister. Before his death in November, Arafat had resisted Yusuf's appointment.
Key Abbas supporter and former security chief Muhammad Dahlan, a senior negotiator with the Israelis, becomes minister for cabinet affairs.
The Palestinian ambassador to the United Nations, Nasir al-Kidwa, was named as foreign minister, replacing Nabil Shaath, who becomes deputy prime minister.