The move looks set to further fragment the divided left-wing parties just six weeks ahead of the November 10th vote, which will be the fourth general election in as many years.
Voters were recalled to the ballot box after Socialist Prime Minister Pablo Sanchez failed to secure support to be confirmed as premier despite months of negotiations, primarily with Podemos.
Inigo Errejon, 35, said he would run at the head of a new list called Mas Pais — “More for the country” — capping weeks of speculation about whether he would throw his hat into the ring.
At a meeting in Madrid, the party confirmed it would contest the elections with Errejon heading a list made up of mostly women.
The move is likely to cement the political and personal split between Iglesias and Errejon who had been part of Spain's anti-austerity “Indignados” movement and who jointly founded Podemos in January 2014.
In a 30-minute address, Errojon said the only thing dragging the country back to the ballot box was “the irresponsibility of the political leaders” who had failed to reach an agreement, in a swipe at the Socialists and Podemos.
“I understand the almost unanimous anger… with the current leaders and the political impasse… which runs the risk of translating into abstention,” he said.
“Spain needs to break the impasse” and for that, it was crucial to ensure that no-one stayed at home “disillusioned, exhausted, drained”.
“If we want the result to be different, we have to vote in a different way to ensure there is a progressive government,” he said, presenting Mas Pais as “part of the solution”.
Best friends no more
For years, Iglesias and Errejon — who both hold a doctorate in political science — were largely inseparable after becoming friends while studying at Madrid's Complutense University.
After founding Podemos, they worked closely together with Errejon serving as Iglesias' deputy until 2017 when they became embroiled in a power struggle that sparked a deep rift within the party.
The dispute was only resolved when Iglesias won a clear mandate to continue as leader.
“Inigo and I were very good friends, we're not any more,” Iglesias said on Tuesday.
As they grew further apart, matters came to a head earlier this year when Errejon co-launched a new leftist platform called Mas Madrid, which ran against Podemos in regional elections in May, weakening support for his former party.
Through Mas Pais, Errejon is likely to try and fill the political space between the radical policies of Podemos and the more moderate stance of Sanchez's Socialists.
Analysts have warned that Errejon's entry into the election race could be damaging not only for Iglesias but for the left as a whole.
“By eroding support for Podemos and splintering the left vote, this could significantly undermine the left's performance in terms of the seat distribution, and potentially even deprive it of a majority,” Eurasia Group analyst Federico Santi warned last week.