Jamal Hakrush will be in charge of improving the policing services in Arab neighborhoods and towns in Israel.
He will be responsible for establishing police stations in new Arab towns while strengthening the existing stations.
Israeli Arabs make up roughly a quarter of the country's population.
Internal security minister Gilad Erdan presented the officer with his rank, calling it a historic occasion.
"If we are honest with ourselves and I refer to all the governments in Israel through the generations ... we cannot look at the Arab society in Israel with the violence and crime in its midst, with a clear conscience," Erdan said.
"Until this day, we have not provided the Arab sector with equal law enforcement capabilities."
Hakrush, 59, is from the Galilee village of Kafr Kanna and joined the police force in 1978. He was previously in charge of police stations in three Israeli cities and deputy commander of the coastal region.
In addition to the new and improved stations, Israel promised to commission hundreds of new Arab police officers.