Yehya al-Sinwar was a founder of Hamas' military wing in the 1980s. Analysts say his election indicates the growing power of the military wing, al-Qasam Brigades, over the group's political wing.
The military wing, which boasts a large arsenal of rockets and thousands of fighters, has fought Israel in three wars since Hamas took control of Gaza in 2007.
Al-Sinwar is expected to take over from Ismail al-Haniya, who has served as the prime minister of the Hamas government in Gaza since 2006.
Hamas is sworn to Israel's destruction, and the group is considered a terrorist group by the US.
What's different about this reshuffle?
By promoting a hardline fighter to its top political post, Hamas indicates it's both preparing for future conflict with Israel and strengthening its base against erosion by hardline Islamist groups.
Who is Yehya al-Sinwar?
Yehya al-Sinwar is 55 and has spent most of his adult life in Israeli jails. In 2011 after more than two decades behind bars, he was freed as part of a huge Palestinian prisoner swap for captured Israeli soldier Gilad Shalit. Subsequently he became a high-ranking member of Hamas' secretive military wing, the Qassam Brigades.
Precisely why Hamas picked this uncompromising fighter to be their leader is as shadowy as the rest of their organization. In recent years hardline groups have grown in strength in Gaza in part because of Hamas' failure to alleviate hardships there. Gaza is an enclave that has largely been closed off by its two neighbors, Israel and Egypt.
Hamas' effort to lift Gaza out of grinding poverty have proven futile. But the group has always claimed the right to resist what it sees as Israeli aggression, so it keeps fighting. In turn, Israel sticks to its tactics of containment. The endless cycle has caused many within Hamas to question the organization's mission and leadership.
Analysts outside the region have long prophesied that the failure of Israel and the wider international community to recognize the legitimacy of Hamas' 2005 election victory in Gaza would ultimately lead to the emergence of extremist groups. It seems that in an attempt to offset the power of the hardliners in Gaza, Hamas was driven to pick its own hardline leader.
What does this mean for the peace process?
This makes the prospects for peace more remote.
Hamas may be feeling the need to up its game in the face of an increasingly bolstered Israel under the new US administration. With the arrival of President Donald Trump, along with his promise to move the US embassy from Tel Aviv to Jerusalem, perceptions in the region are that Palestinians may be the biggest losers.
Hamas may be adjusting its leadership to fit these new political realities, stand up to internal pressure and prepare for what many fear is another inevitable confrontation with Israel.