Leader of the ACT Opposition Zed Seselja will challenge Liberal senator Gary Humphries for party preselection for the Senate.
Speculation has been rife that Mr Seselja would make the move into federal politics since he narrowly lost the Territory election in October.
Liberal nominations for the ACT's Senate ticket close today.
Mr Seselja announced his plans at a press conference while accompanied by Legislative Assembly colleagues.
The preselection vote will be held later this month.
Mr Seselja says he has a strong level of support within the Liberal Party and hopes he will win the nomination.
"I've served the party for the last eight and a bit years in the Legislative Assembly," he said.
"I've served the party for over five years as leader.
"No doubt that leads to a significant amount of support from the rank and file, but in the end it's the rank and file who'll make those judgments."
He says he has spoken to incumbent senator Gary Humphries to inform him about his decision.
"I've taken this decision after much consideration over the summer break and after discussions with my family and close colleagues," he said.
"I'm taking this step because I believe I'm the best person to represent the ACT and the ACT Liberal Party in the Federal Parliament."
Mr Seselja says he will resign as Leader of the Opposition in the Legislative Assembly and there will be a party room vote for a new leader next Monday.
Chief Minister Katy Gallagher says she is not concerned about Mr Seselja's possible move to federal politics.
"I'm not scared of Mr Seselja, never have been, and you know he lost the election and I think he's obviously looking for something better now," she said.
"I think all the promises he made the people of Tuggeranong just three months ago, he's bailing out on them now after professing to be the people he wanted to represent."
Senator Humphries is a former ACT chief minister and has held the safe ACT Senate seat since 2002
He has renominated for the position and says he welcomes a contest for preselection.
"I have to say that I believe that I am the better candidate for that position and I'll be fighting vigorously for the privilege of once again representing the Liberal Party in the federal Senate," he said.