While TDP will contest 151 Assembly seats, the Jana Sena will contest remaining 24 seats.
The TDP has also left three out of 25 Lok Sabha seats for Jana Sena.
Elections for the 175-member Assembly are slated to be held along with Lok Sabha polls in April-May.
The seat sharing deal was announced at a joint press conference by TDP national president and former chief minister N. Chandrababu Naidu and Jana Sena leader and actor Pawan Kalyan at the former's residence here.
N. Chandrababu Naidu also announced the first list of 94 candidates of TDP. Pawan Kalyan announced the first list of five candidates.
Both the parties have not announced candidates for Lok Sabha elections and have also kept the doors open for BJP.
N. Chandrababu Naidu and Pawan Kalyan said that if the BJP comes forward to join them, they will hold the talks and take appropriate decision at an appropriate time.
Both the leaders said they have decided to have the alliance for the future five crore people of the state.
"It's a historic day. This is the first step for a good cause," he said, adding that the two parties came together to save the state and to ensure a good future for the coming generation.
The TDP finalised its candidates after taking the opinion of more than 1.03 crore people.
Naidu said that for the first time in his four-decade-long political career, he finalised the candidates after such an extensive exercise.
"The former chief minister claimed that YSRCP gave up the day when they announced their alliance. He alleged that Andhra Pradesh suffered more because of YSRCP's rule than the state’s bifurcation. “It destroyed the brand of Andhra Pradesh. Both common people and leaders suffered under YSRCP rule," he said.
Naidu urged the cadres of both TDP and Jana Sena to work together to ensure vote transfer.
"By embracing crowdsourcing, the TDP-JSP alliance aims to decentralize power, placing the aspirations and voices of the people of Andhra at the forefront of their political agenda. This historic initiative marks a turning point where TDP-JSP looks more confident and election ready before the final battle," said a joint statement.
"Unlike the incumbent ruling YSRCP which has blatantly given out names through camp offices, TDP-JSP list is not only inclusive but also revolutionary to its core," it added.
Pawan Kalyan said they joined hands to avoid a split of anti-YSRCP votes. He said instead of experimenting with a large number of seats, his party is contesting a limited number of seats for the sake of the state.
The Jana Sena leader selected the candidates who have 98 per cent strike rate. He said some leaders within the party are of the view that the party should have demanded 60-70 seats. Pawan Kalyan said that if Jana Sena had won 10 seats in the previous elections, it could have demanded a higher number of seats.
YSR Congress party had wrested power from TDP in 2019 with a landslide majority, bagging 151 seats in the 175-members Assembly. TDP, which contested on its own, could win just 23 seats.
Jana Sena, which had an alliance with Bahujan Samaj Party (BSP) and the Left parties, won a single seat.
YSRCP had also bagged 22 Lok Sabha seats while TDP had to contend itself with three seats.