Tasked with monitoring political groups and tracking down collaborators with Israel on Tuesday, Rashid Abu Shibak brings a wealth of experience to the new post.
Abu Shibak was the security official who helped lead a 1990s crackdown on armed Palestinian factions.
His appointment comes as Abbas continues his restructuring of Palestinian security forces - a step towards meeting US and Israeli demands.
The appointment could also strengthen prospects for peacemaking that have already grown since Abbas was elected president to replace the late Yasir Arafat in January.
A Palestinian Interior Ministry spokesman said the reforms would help forces impose order. "People will soon begin to feel tangible results," said Abbas spokesman Tawfiq Abu Khusa.
In a sign of the challenges faced by Abbas and Abu Shibak, Palestinian resistance fighters fired two home-made rockets into southern Israel on Tuesday.
There was no immediate claim of responsibility for the attacks, which caused no casualties or damage. But Abbas reacted to the missile launch, telling reporters: "These are chaotic acts and violate the national consensus. They do not serve the Palestinian cause and they must be stopped by all means."
Abu Shibak, a senior officer in the ruling Fatah movement once jailed by Israel, was previously the head of preventive security in Gaza.
He was a deputy to security official Muhammad Dahlan in a 1996 crackdown on resistance groups.
Israel has said Palestinians must dismantle armed groups if there is to be any progress on talks and Israeli Prime Minister Ariel Sharon has accused Abbas of failing to mount a "real fight against terrorism".
Abbas says he prefers dialogue to confrontation with the factions.
Small signs of discontent over Abbas' security reforms have emerged from former officers after he named new heads for national security, intelligence and police at the weekend and forcibly retired hundreds of men over 60.
"The political leadership, in making these changes, aimed to distance themselves from responsibility over the deterioration of security and lay the blame on those who retired," said former police chief Saib al-Ajiz, who resigned following an attack on a Gaza prison in February.
"I do not believe that changing security leaders will end the deteriorating security conditions."