Sehrai, in his late 70s, is a senior leader of Hurriyat's hardline faction and, like Geelani, has been in and out of jail for years together.
Geelani, 88, cited his falling health and curbs on him by government as reason for resigning from the post of TeH's chairman. "So today I willfully step-down from the chairmanship and advise the Shoora to arrange an alternative at the earliest", he said.
Geelani has been viewed as a key separatist leader in the Valley and has been vocal on advocating Kashmiri separatism.
A confidant of Geelani, Sehrai will be elected as the next chairman of the TeH when the elections to the post are held later this year.
Hurriyat patriarch Syed Ali Geelani on Monday took a major decision by announcing that his long time aide and Secretary General Tehreek-e-Hurriyat will act as chairperson of the party.
Sehrai's appointment as the interim chairman signals a change of guard in the separatist group at a time when some of the important TeH members are in the custody of the NIA, on charges of having received secret funding for fomenting unrest in Kashmir. "I extend my fullest cooperation and honest wishes to the would-be leadership of the organization", Geelani, as per the TeH statement said.
While addressing advisory body meeting of the party, Geelani said from last 8 years of continuous house arrest and restrictions by authorities on interactions with party colleagues has dented the functioning of the party.
Sehrai and (Syed Ali) Geelani's release was part of "goodwill gesture" after Rajiv-Farooq accord paved way for elections.
Geelani floated the TeH after the Hurriyat Conference split in 2003. Shooba-i-Talaba was renamed as Islami Jamiat-e-Talaba (IJT) later on and the current framework of IJT has been designed by Sehraie himself in 2001.