The activists in the breakaway faction stood firm on Thursday in their determination to push aside the movement's corrupt old guard and form their own party for the January parliamentary elections.
The decision made after meeting Marwan Barghouti, their imprisoned leader, deepened a crisis for President Abbas and threatened to give a boost to the rival Islamic Hamas movement.
After seeing uprising leader Barghouti in an Israeli prison, where he is serving five life terms for involvement in deadly attacks, Sufian Abu Zaydeh, a close associate of Barghouti, said he was determined to go it alone despite last-ditch efforts by Abbas to patch up their dispute.
"Marwan of course would like to see one list, and we did everything possible in order to be one list," Abu Zaydeh said outside the prison.
"Unfortunately, we didn't succeed."
Registration for the 25 January election closed on Wednesday, with the young guard presenting its own list, calling its new party The Future, while the Fatah old guard registered its candidates separately.
Abbas still hopes to unite the
ruling Fatah party
However, Barghouti's name is featured on the top of both lists, a manoeuvre to win time to resolve the differences, since one or both of the lists must now be revised.
Nabil Shaath, Palestinian information minister and a Fatah member, said on Thursday that candidates who had not yet decided whether to run on the Fatah list or Future list, would have to decide by Friday.
The final Fatah list will be compiled on Friday by Abbas, Shaath said.
Barghouti, 46, is standing firm against the old guard, his associates said.
Kadoura Fares, another of the leaders who met Barghouti on Thursday, said: "This is not a matter of a personal decision by Marwan. It's a matter of a majority in the movement."
Abbas, who also heads Fatah, still hopes to reunite the party.
Taking advantage of the dissatisfaction, Hamas is posing a significant threat to Fatah rule.
Ismail Haniyeh will lead the Hamas
list for its first parliamentary poll
Hamas presented a list with Ismail Haniyeh, a relative pragmatist, in the top spot, a stark contrast to the Fatah infighting, which has even turned violent several times in recent weeks.
Exit polls after local elections reflected new Hamas strength in places where Fatah used to be dominant.
Meanwhile, violence continued on Thursday at a relatively low level, a day after Israel killed four Gaza fighters in an air strike.
Palestinians fired at least six rockets at Israel from Gaza. One exploded near a beer warehouse outside the Israeli city of Ashkelon. Islamic Jihad claimed responsibility for that one.
Israel hit back with an artillery barrage at northern Gaza where fighters launch the rockets. No one was hurt.
Citing continuing armed activity in Gaza, Israel cancelled plans to allow a trial of a "safe passage" for Palestinians through its territory between the West Bank and Gaza.
Under a US-brokered agreement, Israel was to open the passage this week, but it called off the process after a Palestinian bomber killed five Israelis on 5 December.
"This is not a matter of a personal decision by Marwan. It's a matter of a majority in the movement"
associate of Marwan Barghouti
The trial was set for next week. The Israelis gave no new date.
In Bethlehem in the West Bank, Palestinian security tipped off Israeli police about a car bomb.
The Israelis found the abandoned car next to a bypass road used by settlers and blew it up. The explosion was heard in nearby Jerusalem, setting off false reports of a bombing there.
Around the same time, Bethlehem officials lit the town's Christmas tree in a ceremony marking the holiday season in the traditional birthplace of Jesus.