Major Israeli rival Benjamin Netanyahu reportedly agreed to join a unity government, ending a year of political stalemate.
Benny Gantz’s surprise election to parliament on Thursday paved the way for the deal.
He will remain in the role until he is appointed Foreign Minister, Israeli media report, and will therefore take on the first in September 2021.
Mr. Gantz had refused to serve under Mr. Netanyahu because he was facing trial.
The Israeli leader was formally accused of corruption, fraud and breach of trust in January.
Netanyahu’s Likud party has won the most seats in this month’s general election – the third in less than a year – but more lawmakers have recommended that Gantz be given a mandate to form a government.
Rivals were subsequently asked to put aside policy to combat the new coronavirus pandemic, which infected 2,600 people in Israel and caused eight victims.
Benny Gantz’s blue and white alliance was forged as an anti-Netanyahu party.
He promised never to sit in a government with a prime minister facing criminal charges, as Netanyahu does.
But Thursday evening, after a political crisis that had lasted for a year and three elections, the Gantz blockade had collapsed. The hopes of forming a government vanished and his commitment not to sit with Netanyahu was now shattered.
Gantz, without a clear path to a coalition on his terms and under pressure from the coronavirus epidemic, nominated himself and was elected president of the Knesset. He gained the support of a majority of MPs after pledging to join a government of “emergency” units.
The deal will reportedly see Netanyahu remain prime minister and Gantz will take over late next year. Meanwhile, the incumbent leader will face a corruption trial.
But in a time of crisis, and despite deep polarization over his leadership, this seems like a clear victory and another return from the brink of the prime minister to serve Israel.
Earlier Thursday, Blue and White appeared to be preparing to pass legislation that would prevent an accused criminal suspect like Netanyahu from forming a new government.
Knesset spokesman Yuli Edelstein – Netanyahu’s ally – resigned on Wednesday in a dispute with the Supreme Court. Blue and White were supposed to present a candidate from among his ranks, Meir Cohen, to replace him.
But in a surprise move, reportedly after being warned by Likud that he would end talks on a unity government if Mr. Cohen were elected, Gantz instead showed up.
Before the elections took place on Thursday evening, Gantz was sentenced by many lawmakers who had supported him for the premiership.
“This is a dark day,” said Nitzan Horowitz, leader of the leftist Meretz party.
Yesh Atid and the former Defense Minister Moshe Yaalon’s Telem faction, meanwhile, have made formal requests to detach from the Gantz faction in the Knesset. They will remain as a part under the name of blue and white.
Gantz defended himself in a speech after being elected rapporteur with the support of the right-wing bloc of Netanyahu, saying it was “the right thing to do right now.”
“These are not normal times and require unusual decisions,” he said. “Therefore … I intend to examine and advance in any way the establishment of a government of national emergency unity.”
Mr. Netanyahu was due in court last week to face corruption charges related to three separate cases. But the hearing was postponed to at least May 24 due to the coronavirus epidemic.
The prime minister is assumed to have accepted gifts from wealthy businessmen and given favors to try to get more positive press coverage. He denied any wrongdoing.