The shake-up on Saturday brings Abbas closer to meeting Israeli and US demands for reform of what they say are corruption-plagued security forces, which have also been criticised by ordinary Palestinians for failing to maintain law and order.
Brigadier-General Sulaiman Hillis was named national security forces commander to replace Musa Arafat, a powerful figure in Gaza who is a cousin of the late Palestinian leader.
Abbas replaced Palestinian intelligence chief Amin al-Hindi with his deputy, Tariq Abu Rajab. Brigadier-General Ala Husni was named as the new police chief.
Hundreds of other security personnel were forced out under a new law requiring staff to retire at 60, including dozens of senior officers, among them 11 with the rank of major-general.
Ala Husni (L) was named as the
new Palestinian police chief
Abbas confirmed that the retirement order and reshuffling of security was carried out smoothly, with differences resolved quickly.
The president also awarded merits to 10 senior officers who were retired on pension.
"Today they are giving a wonderful new example by the smooth and civilised transfer of responsibility and authority," senior Abbas aide Tayib Abd al-Rahim said in a statement.
Abbas, elected in January, is walking a political tightrope in carrying out the reforms.
While he is under pressure at home and abroad for reforms that could be vital to Middle East peacemaking, Abbas needs to avoid alienating powerful leaders in the faction-ridden Fatah movement who have long held sway over security forces.
The United States and Israel had been pushing for changes to more than a dozen security forces that were often in competition with each other.
Palestinians complained that disorder was growing despite the tens of thousands of security forces personnel, who were widely seen as incompetent and often corrupt.
Abbas has guaranteed good pensions for the departing officers, which could help reduce opposition to the forced retirements, officials said.
Abd al-Rahim said two of the outgoing security personnel, Musa Arafat and al-Hindi, had been reassigned as special advisers to the president.
Gaza tunnel closed
Meanwhile, Palestinian Civil Affairs Minister Muhammed Dahlan met representatives of Palestinian factions in Gaza, focusing on preparations for the expected Israeli withdrawal from Gaza and the northern West Bank.
Palestinian policemen have been
closing tunnels in Gaza
Elsewhere in Gaza, Aljazeera reported that Palestinian authorities had closed a tunnel that was found in al-Salam neighbourhood east of the city of Rafah.
The tunnel was dug under the border belt separating Palestinian and Egyptian lands.
Tunnels are often used for smuggling weapons into Gaza from Egypt.