Hamas, which was founded in 1987, is an offshoot of the Muslim Brotherhood - the banned Egyptian Islamist movement.
"Under its new leadership, the movement must continue and intensify its efforts to strengthen internal Palestinian relations ... strengthen the steadfastness of our people, and mobilize Arab, Islamic and global powers to stand by the Palestinian people", said Hamas spokesman Fawzi Barhoum in a statement announcing Haniyeh's selection.
Haniyeh's rise was the latest sign of a power shift in the Islamic militant Hamas from the diaspora to Gaza, which has been under Hamas rule since a 2007 takeover. After chasing out Abbas' forces in 2007, it fought three cross-border wars with Israel, starting in 2008.
The Israeli leader posted a video on Sunday that showed him throwing a Hamas policy paper, which attempted to soften the group's image, into a trash can.
The near suffocation of Gaza, not only by Israel but also by most of the worldwide community, has a lot to do with Hamas' final realisation that its stance is a non-starter.
"Hamas does not wage a struggle against the Jews because they are Jewish but wages a struggle against the Zionists who occupy Palestine". In 1992, he was exiled by Israel, along with scores of Hamas leaders, to southern Lebanon for about a year. The move was made as part of the PA's campaign to put pressure on Hamas to return control of the Strip. Abbas has been an outspoken opponent of violence, saying it undercuts Palestinian interests.
The document notably accepts the idea of a Palestinian state in territories occupied by Israel in the Six-Day War of 1967.
The bitter split between Fatah and Hamas has taken a new turn in recent days.
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He was born in the Shatti refugee camp in western Gaza City in 1963.
A statement from the office of Israeli Prime Minister Benjamin Netahyahu rejected the revised charter as an effort to "fool the world".
For the past four years he has served as Mashaal's deputy.
For his first appearance as Hamas leader, Haniyeh chose a symbol of elusive Palestinian unity - a solidarity tent where several political factions are represented, including Hamas and the Fatah movement of Palestinian Authority President Mahmoud Abbas.
Shaaban says he does not think there will be any major changes in Hamas' policies due to Haniyeh's new position.
"If someone is from outside Gaza, he won't talk about Gaza's ordeals and worries properly", said Ahmed Okasha, a Gaza vendor.
This is Haniyeh, the Gazan Hamas terror leader who has risen in the ranks to head the Hamas political bureau.