The move underlines the central role of the Israeli armed forces in the incoming administration of Mr Barak, once Israeli chief of staff. His former military colleagues played a critical role in organising his successful election campaign.
Control of the negotiations by the ex-generals appears to by-pass leaders of Mr Barak's own Labour party, who negotiated the original Oslo peace accords with the Palestinians. Israeli commentators see the predominance of former generals in key positions as already giving the new government a Latin American flavour.
Mr Barak will tightly supervise the negotiations himself through a special unit in the Prime Minister's office to be called "the peace administration". It will be co-ordinated by General Danny Yatom, the former head of Mossad, Israel's foreign intelligence service.
General Yatom will oversee three separate groups dealing with talks with Syria, Lebanon and the Palestinians according to the daily Haaretz. Mr Barak's candidate to head the team negotiating with the Palestinians is General Amnon Lipkin-Shahak, the recently retired chief of staff who succeeded Mr Barak in the job.
General Uri Saguy, the former head of Israeli military intelligence, would head the team negotiating with Syria. General Yossi Peled, the former head of the Israeli army's northern command, would deal with Lebanon. Mr Barak promised during the election to get the Israeli army out of Lebanon within a year, the price of which is likely to be an Israeli withdrawal from the Golan Heights captured in 1967.
General Lipkin-Shahak and General Saguy are both highly respected military professionals. Yossi Beilin, considered the architect of the Oslo accords, is not mentioned as part of the new peace team.
Mr Barak marginalised the role of the Labour party, which he heads, during the election, campaigning under the name of the "One Israel" movement in alliance with two small parties. Senior Labour party leaders have played little role in the prolonged negotiations with other parties to try to form a coalition government.
Despite his election as Prime Minister, Mr Barak is largely an unknown quantity in Israel because he has spent only a short time in politics and his electoral triumph was primarily the result of the unpopularity of Benjamin Netanyahu, the Prime Minister since 1995.
Mr Barak made his reputation as leader of an elite commando unit in the army. He has retained a liking for secrecy and achieving his aims through tightly disciplined teams set up for specific missions.
His plan to place negotiations entirely in the hands of ex-generals is unprecedented. But an advantage of making former senior military officers and security chiefs responsible for negotiations is that it would be easier to fend off attacks from the right against inevitable Israeli territorial withdrawals.
Mr Barak may, however, be stirring up future difficulties for himself by ignoring Labour leaders, many of whom were unhappy with his rapid takeover of the party.