Jussi Halla-aho, 46, a eurosceptic convicted of hate speech, replaced foreign minister and moderate Timo Soini, long the party leader.
Halla-aho won 949 out of 1,845 votes among party members at its congress, having argued that the party had been tainted by mainstream politics.
"If we want the trust of the voters back, we have to do things differently and better than until now," he said in a televised speech at the congress in Finland's western city of Jyvaskyla.
"We have to be more aggressive and clearer nowadays and put those issues on the table which differ us from all others parties," he added, referring to anti-immigration and multi- culturalism.
Participating in the three-party coalition has come at a heavy price for the Finns party. Its support has more than halved from 17.7 per cent in the May 2015 general election to 8.4 per cent in a February poll by Taloustutkimus.
A member of the European Parliament, Halla-aho has said he would push the two other coalition parties to toughen their immigration policies.
He wants to steer his party further to the right, which could mean pulling out of the coalition government, which the Finns joined in 2015.
The coalition government includes Prime Minister Juha Sipila's Centre Party and the conservative National Coalition Party (NCP). Both are pro-EU and have cut spending to boost growth and reform labour.
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