The political movement said "Yahya Sinwar was elected to head the Hamas political office in the Gaza Strip," noting his previous role as deputy post was filled by Dr Khalil al-Hayya.
The 50-year-old new head is a prominent senior leader within the Hamas movement. He was sentenced to serve four life sentences in 1988 before being released in October 2011 under an agreement to exchange more than 1,000 Palestinian prisoners for the release of Gilad Shalit – an Israeli soldier captured five years earlier.
Sinwar was born in a Khan Younis refugee camp in the south of the Gaza Strip and was held in Israeli prisons on several occasions.
The new leader held leadership positions during his time in prison.
Sinwar established the movement’s security and intelligence network, Majd in the early 1980s and was allegedly involved in recruiting for the wing.
His brother, Mohammed Sinwar, is the leader of the al-Qassam brigades - a miliary wing which is accused of capturing Israeli prisoner, Shalit.
He will succeed Ismail Haniya, who is seen by many observers as the most likely successor to Hamas's current exiled leader Khaled Meshaal.
Hamas, which has controlled the Gaza Strip for a decade, has been conducting internal elections for several months.
Last year the Palestinian government postponed the first municipal polls in the occupied West Bank and Gaza Strip in 10 years after the high court ruled they should be held only in the Fatah-run West Bank.
The last time the Palestinians staged elections in which both Hamas and Fatah took part was in 2006.