Mustafa Barghouti was widely seen as an outsider in a two-horse presidential race with former Prime Minister Mahmoud Abbas to succeed late Palestinian leader Yasser Arafat, who died in November.
Barghouti says he has "excellent chance"
Dr Barghouti - an independent candidate - became Mr Abbas's main challenger for the top post only after jailed uprising leader Marwan Barghouti, a distant relative, withdrew his candidacy.
But despite trailing badly in opinion polls, the 50-year-old democracy and human rights activist scored a respectable 19.8% of the vote.
"I feel very happy, and very proud," he said after acknowledging defeat. "We didn't win the presidential race this time. We will win it next time."
Dr Barghouti has been seeking to portray himself as a man of the people, campaigning for change and demanding major reforms in the Palestinian Authority.
"People are fed up with the system, they are fed up with corruption, they are fed up with favouritism and people want change," he said during one of his campaign rallies.
But with no backing from any major political party, Dr Barghouti was forced to rely heavily on his volunteers in the Gaza Strip and the West Bank to promote him, often by going door to door.
Barghouti has complained that Israel is hampering the election
He also toured hospitals and refugee camps in the Gaza Strip from his native town of Ramallah in the West Bank.
Some of his visits made front-page headlines in the regional media after stirring controversy.
Last month, Dr Barghouti claimed he had been detained and beaten by Israeli soldiers at a West Bank checkpoint.
He said soldiers had hit him and pinned him to the ground with rifles after he complained about language they used. The Israeli army denied the accusations.
Like Mr Abbas, Dr Barghouti seeks an Israeli withdrawal from the Gaza Strip and the West Bank and also East Jerusalem, the release of Palestinian prisoners and campaigns for the right of Palestinian refugees to return to their homes.
Dr Barghouti - a doctor trained in the former Soviet Union - is known to many ordinary Palestinians for running a healthcare organisation (the Union of Palestinian Medical Relief Committees) that he established back in 1979.
He is also the secretary of the Palestinian National Initiative - a recently established opposition movement which campaigns for democratic reforms.
"We are now the second most important political force in Palestine, ahead of Hamas. This is very, very important," he said after learning of the sizeable support the electorate gave him.
In 1991, Dr Barghouti took part in the Madrid conference that paved the way for peace deals between the Palestinians and Israel.
Despite having been written off as a no-hoper, he could yet become a major political player in the future, some experts say.