The Barghouti-led "young guard" had long pushed for a greater say, especially after last year's death of Palestinian leader Yasser Arafat, who founded Fatah and controlled it four decades.
Arafat's successor, the reform-minded Mahmoud Abbas, agreed to hold internal elections for the list of parliament candidates and, under pressure from the young guard, blocked demands by Fatah old-timers to be assigned secure spots on the slate. However, Abbas will still have some say about who gets on the final list.
"The old guard has failed politically and administratively, and in running their organization in a democratic way," said Palestinian analyst Hani al-Masri. "It's time to go home."
The Fatah veterans, Arafat contemporaries who returned with him from exile in the early 1990s, are widely considered as corrupt. Barghouti's generation rose through the ranks during the first Palestinian uprising, from 1987-1993, but was kept out of leadership positions by the old-timers.
Barghouti, 46, is seen as a potential successor to Abbas even though he is serving multiple life terms in an Israeli prison for involvement in shooting attacks that killed five Israelis.
Barghouti supports peace negotiations with Israel and before the outbreak of fighting in 2000 had close ties to Israeli leaders. However, he also advocates the use of force, including shooting attacks on Israeli settlers and soldiers, to try to drive Israel out of the West Bank.
Israeli officials said Saturday there is no chance Barghouti would win early release.
"Barghouti was convicted in an Israeli court, a civilian court, I would stress, and sentenced to consecutive life sentences for his involvement in the murder of innocent civilians," said Mark Regev, an Israeli Foreign Ministry spokesman.