Modi, the Gujarat chief minister, will also contest from Vadodara in that state apart from Varanasi in Uttar Pradesh.
Long discussions preceded the decision on Advani at the day-long meeting of the BJP Central Election Committee, from which the 86-year-old party patriarch kept away, saying he did not want to be part of discussions involving his constituency.
It was not clear whether Advani had consented to the final party decision. Senior party leaders Sushma Swaraj and Nitin Gadkari went to his residence to persuade him to accept Gandhinagar.
Advani had insisted he should have the right to choose his constituency like many other leaders who were allocated their preferred seats, sources said.
Since the elevation of Modi in the hierarchy, Advani has been sulking and his desire to shift from Gandhinagar is seen as a reflection of the unease in his relationship with Modi.
At the meeting, Modi is believed to have insisted Advani contest again from Gandhinagar, lest a message went that all was not well in the party.
Advani represented Gandhinagar in the 10th Lok Sabha (1991-96), the 12th (1998-99), 13th (1999-2004), 14th (2004-09) and the current Lok Sabha (2009-14).
The list of 60 candidates, finalised by the party on Wednesday, had Bollywood actor Hema Malini contesting from Mathura in Uttar Pradesh and Olympian medalist Rajyavardhan Singh Rathore from Jaipur (Rural).
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