Of the 104 local councils up for grabs in the occupied West Bank on Thursday, Fatah won control of 61 compared with 28 for Hamas and 15 for other factions.
Jamal al-Shobaki, head of the Higher Commission for Local Elections, told Aljazeera that initial election results showed Fatah's lead over Hamas.
Al-Shobaki said the results were in line with opinion polls that gave Hamas about 30% support - pointing to big gains when it takes part in January parliamentary elections.
Hamas called on related sides to wait until the process of counting votes is complete before victory is claimed.
"Up until now, Fatah movement seems to be leading. However, these are initial results only," al-Shobaki said.
"I believe that Fatah will win the majority of votes in 6l electoral constituencies, out of 104, while Hamas will lead in 28 centres.
"Other political forces and independent candidates will win the majority of votes in the rest of the constituencies," he added.
Hamas political clout
Thousands voted in the election, seen as a test of Hamas's political clout ahead of the legislative poll. Hamas boycotted the only previous parliamentary ballot in 1996 to protest against government policy toward Israel.
Thursday's ballot, the third phase of local elections for more than 1000 council seats in the West Bank, was also the first Palestinian vote since Israel completed its withdrawal from the Gaza Strip on 12 September after 38 years of occupation.
"I believe that Fatah will win the majority of votes in 6l electoral constituencies, out of 104, while Hamas will lead in 28 centres"
Head of the Higher Commission for Local Elections
Al-Shobaki put turnout at 81%. Final official results were due to be announced on Saturday or Sunday.
The prospect of a key role for Hamas in Palestinian politics has raised eyebrows in Israel and abroad due to the group's refusal to disarm under a US-backed "road map" peace plan.
Prime Minister Ariel Sharon said Israel would not facilitate Palestinian voting in the parliamentary ballot in the West Bank, where the army has a network of roadblocks, if Hamas ran in the election without first disarming.
His deputy, Vice Premier Shimon Peres, said on Thursday: "There cannot be a situation where one party utilises the ballot and another the bullet. No free democratic election can be conducted in this manner."
Samir Hleleh, the Palestinian cabinet secretary, said there was some concern that Western donor nations may withhold funds to any local councils where Hamas holds sway.
"It will be difficult for Hamas-controlled municipalities to receive international donor money. This would place a heavier burden on the government to provide aid," Hleleh said.