Rodney Connor, former chief executive of Fermanagh District Council, will stand as an independent candidate with the DUP and UUP having both decided to step out of the running in a bid to take on Sinn Fein.
The move comes after months of protracted negotiations between the parties to find someone to try to remove sitting Sinn Fein MP Michelle Gildernew, who has been the incumbent since 2001.
The Conservative Party and David Cameron had insisted that one of their candidates run in each of Northern Ireland's 18 constituencies, under the joint Tory-UUP banner.
Outlining the compromise deal, Mr Connor said he would be prepared to accept the Tory whip at Westminster but insisted that in regard to local matters he would vote in the best interest of the region.
"I will take the Conservative whip in Westminster if I get there but I will always put the needs of the people of Fermanagh/South Tyrone first", Mr Connor told UTV.
"I'm delighted that both Unionist Parties have agreed to support my candidacy but I'll say again I'll be supporting everyone and I hope others will come and show their support for me as well. I am an Independent Candidate and I will remain an Independent Candidate."
DUP economy minister Arlene Foster, who had been due to run for her party in the constituency, said she was delighted Mr Connor would be standing as an agreed candidate.
"This follows many weeks of discussions and negotiations and represents a good and potentially historic day for Fermanagh and South Tyrone and for unionism," she said.
"When unionism is divided unionism is weakened. I have no doubt that Fermanagh and South Tyrone can set the example for other areas in Northern Ireland to follow."
UUP Assembly member Tom Elliott, who has also stepped out of the race, said: "I was aware of a strong community desire to ensure representation for Fermanagh & South Tyrone.
"There was very strong support for a single Unionist community candidate that could command the overall support of the Unionist and wider communities."
Sitting MP Michelle Gildernew has accused the unionist parties of pursuing a sectarian agenda.
"I think it's a retrograde step", Michelle Gildernew said.
"It takes us back to the days of division and inequality.
"Given the fact that Rodney Connor is running with a view to taking a Tory whip at Westminster, it is worrying and disconcerting, not just for the people of Fermanagh & South Tyrone, but for all of the people of the north who are going to suffer very badly at the hands of a Tory government if they are elected in May," she told UTV.
The SDLP and Alliance party also strongly attacked the unionist move.
"This will serve to polarise the people of Fermanagh & South Tyrone", SDLP candidate Fearghal McKinney said.
"The SDLP is about a shared future, representing everybody in the constituency reflective of the fact that after this election there will be massive job losses. We are there to defend all of your interests in that regard."
Alliance Party candidate Vasundhara Kamble has also slammed the decision, describing the move as tribal and cynical.
"The fact that both parties have struck a deal for Fermanagh and South Tyrone shows that shows tribalism still appears to be the main priority for both UCUNF and the DUP," Vasundhara Kamble said.
"It beggars belief that the Tories would put up with a deal of this nature at all."
Candidates who have so far declared their intention to stand for the Fermanagh & South Tyrone seat:
- Ind: Rodney Connor
- Sinn Fein: Michelle Gildernew
- SDLP: Fearghal McKinney
- Alliance: Vasundhara Kamble
There may be more declarations by the close of nominations on 20 April.