The rally in Gaza's main stadium was called to mark the 42nd anniversary of the once-dominant Fatah movement, which lost badly to Hamas in parliamentary elections a year ago.
Witnesses put the crowd at tens of thousands and said it was one of the biggest Fatah rallies in years in the Gaza Strip.
It came a day after Abbas declared illegal a Hamas security force in Gaza.
In response, Hamas said that it would double the strength of its so-called "executive force" to 12,000.
Mohammad Dahlan, a senior Fatah member and former security chief, taunted Hamas during his speech, telling bodyguards to move away.
"I need no one ... let Hamas shoot me," Dahlan said, as Fatah men in the crowd fired rifles into the air. "Fatah is alive and is immortal. Death for the killers, the future is ours ...
"If a Fatah man is attacked, we will respond. Their leaders will be wrong to think they are far from the reach of our hands."
Mushir al-Masri, a Hamas MP, accused Dahlan of inciting violence. "It was a call for internal fighting and sedition," he said.
Abdel-Rahim said Palestinians should focus their battle on Israel, not fight each other.
"Our differences must remain with the occupation, which is bulldozing our land and killing our people," he said.
Hamas created its security force after forming a government last March and defied a previous order by Abbas to integrate personnel into other security services.
At a news conference with other armed groups, Abu Ubaida, Hamas's armed wing spokesman, said: "Those who receive arms from the Americans are the ones who are responsible for the bloodshed."
The Bush administration will provide $86m to strengthen security forces loyal to Abbas, according to documents seen by Reuters on Friday.