US President-elect Donald Trump has chosen right-winger David Friedman as America's next ambassador to Israel.
The 57-year-old lawyer is strongly critical of the long-held US goal of a two-state solution to the Israeli-Palestinian conflict.
He also supports Jewish settlement building in the occupied West Bank and moving the US embassy to Jerusalem.
A senior Palestinian official warned that such moves "will be the destruction of the peace process".
Veteran negotiator Saeb Erekat said moving the embassy and "annexing" settlements in the West Bank would send the region down a path to "chaos, lawlessness and extremism".
However, he said he did not really believe that Mr Trump would approve either action.
"The United States at the end of the day is a country of institutions, and they are guided by their national interests," he said.
Mr Friedman said earlier he looked forward to working "from the US Embassy in Israel's eternal capital, Jerusalem".
The United Nations does not recognise Jerusalem as Israel's capital, and the US embassy has been located in Tel Aviv for decades.
Analysis: Yolande Knell, Reporter, Cairo
It's no surprise that the president-elect has made a controversial choice to represent his administration in Israel.
But the views of his long-time friend and campaign adviser on Jewish issues mark a complete break with American foreign policy which has been followed by Democratic and Republican administrations alike.
David Friedman has made his support for Jewish settlements in the West Bank and East Jerusalem clear.
But the current White House says those settlements undermine the chances for peace.
He's also indicated that he'll help fulfil Mr Trump's promise to move the US Embassy from Tel Aviv to Jerusalem, despite international objections.
Israel occupied the West Bank and East Jerusalem in the 1967 Middle East war.
The Palestinians want East Jerusalem as the capital of their promised future state - but Israel claims the entire city as its undivided capital.
Mr Friedman advised Mr Trump on US-Israel issues during the election campaign.
A liberal Jewish group opposed his nomination. Conservatives welcomed it.
J Street, a liberal pro-Israel group based in Washington, said it was "vehemently" opposed to the nomination of Mr Friedman.
"As someone who has been a leading American friend of the settlement movement, who lacks any diplomatic or policy credentials and who has attacked liberal Jews who support two states as 'worse than kapos', Friedman should be beyond the pale for senators considering who should represent the United States in Israel," it said.
Kapos were Jewish prisoners in Nazi camps in World War II who the SS put in charge of other inmates. They have been viewed by some as complicit in the brutal treatment of other prisoners.
The Zionist Organization for America, a conservative US pro-Israel group, welcomed the nomination, saying Mr Friedman had "the potential to be the greatest US ambassador to Israel ever".
Israeli Prime Minister Benjamin Netanyahu, who has not enjoyed warm relations with Democratic President Barack Obama, has welcomed Mr Trump's election.
- Bankruptcy attorney who has represented Mr Trump in connection with his investment in Atlantic City casinos
- Grew up in Woodmere, New York; graduate of Columbia College and New York University Law School
- Supporter of Jewish settlement in the Israeli occupied West Bank (which he refers to as Judea and Samaria); President of American Friends of Beit El Institutions - which raises money for the settlement Beit El
- A fluent speaker of Hebrew, whose Bar Mitzvah was held in Jerusalem at the Western Wall, Mr Friedman owns a residence in Jerusalem and says he has probably visited the "Holy Land" more than 100 times
- Has strongly criticised a two-state solution to the Israeli-Palestinian conflict as a "illusion", accusing the Palestinian leadership of corruption and saying Palestinians do not care whether they are ruled by Palestinian Authority President Mahmoud Abbas or Israeli PM Benjamin Netanyahu
- Has suggested Israel could annex the predominantly Arab-populated West Bank while retaining its Jewish character