The Palestinian Central Bureau of Statistics said Tuesday it has recorded a population of 12.1 million people, of whom 4.6 million live in the occupied territories and the remainder abroad.
The figures show that at the end of 2014, 2.8 million Palestinians lived in the West Bank and 1.8 million in the Gaza Strip.
In the impoverished Gaza enclave, the population of 4.9 people per square kilometre makes its density one of the world's highest.
Of the 4.6 million people in the Palestinian territories, 43.1 percent are refugees.
The balance of 7.5 million Palestinians live in exile, the majority in 31 UN-installed refugee camps in Jordan, Lebanon and Syria.
UNRWA, the world body's aid agency for Palestinian refugees, has 5.49 million people registered on its books.
The figures were announced ahead of Friday's 67th anniversary of the "Nakba", or "catastrophe" in Arabic, the day when Palestinians mourn Israel's establishment in 1948.
In a statement, the head of the statistics bureau said that in 1948, "1.4 million Palestinians lived in 1,300 towns and localities in historic Palestine".
After the war that followed Israel's creation, "Israel took control of 774 towns and villages, destroyed 531 and committed 70 killings and massacres in which 15,000 people died", she said.
Some 154,000 Palestinians decided to remain on their land after that conflict, and their Arab Israeli descendants now number nearly a million and a half.
Other figures made public by the Association for Civil Rights in Israel NGO show that Palestinians make up 37 percent of the population of Jerusalem.
The occupied eastern part of the holy city was captured in the 1967 Six-Day War and later annexed in a move never recognised by the international community.
Of the Palestinians in the occupied east Jerusalem, 75 percent live below the poverty line and the homes of almost 40 percent are threatened with destruction because they lack building permits from Israeli authorities.