Salam Fayyad, left, had announced in March that he was resigning
A new Palestinian government based in the West Bank has been sworn-in, dominated by the Fatah faction of Palestinian leader Mahmoud Abbas.
It is headed by the independent politician Salam Fayyad. There are no members of the rival Hamas movement.
Hamas, which won Palestinian elections three years ago and controls Gaza, says the new government is illegal.
On Monday, Fatah and Hamas officials ended their latest talks in Cairo without a deal on national unity.
Hamas demanded departure
Salam Fayyad is a former World Bank economist who was praised for his measures to tackle corruption during a spell as Palestinian finance minister between 2002 and 2005.
He became prime minister of the Palestinian Authority in 2007, but resigned in March this year ahead of the power-sharing talks in Egypt.
Hamas had been demanding his departure.
The divisions between Fatah and Hamas are seen as one of the stumbling blocks to progress towards an Israeli-Palestinian peace deal.
Donor countries recently pledged funds for the reconstruction of Gaza, but many have refused to channel money through Hamas, saying the Palestinian Authority should supervise the spending.