Fayyad, an independent, will retain his post as finance minister and also serve as foreign minister in the emergency government, which Abbas appointed to replace the Hamas-led Cabinet he fired after Hamas seized control of Gaza.
The small emergency Cabinet is dominated by independents, including human rights activists and business people. Only one, Interior Minister Abdel Razak Yehiyeh, is a member of Abbas' Fatah movement.
In taking office, Fayyad said the new government would work to end the chaos and provide security for the Palestinians. "We are going to work with clean hands, systematically," he said.
Addressing the Palestinians in Gaza, he said: "You are in our hearts, and the top of our agenda."
It is "time to work together for Palestine," he said.