"Together for Yes and the CUP have reached a deal to form a government and this will not go to (new) elections," a senior regional government source told AFP.
"There is an agreement. We will have a government and stability," Jordi Sanchez, president of the pro-independence Catalan National Assembly group, said on Twitter.
In September, Mas' "Together for Yes" secessionist alliance and the more radical, far-left CUP party together won a majority of seats in the 135-seat parliament in the wealthy, 7.5-million-strong northeastern region.
Despite more than three months of intense negotiations, the small party that got 10 seats refused to give Mas their backing, resenting the austerity measures he implemented and corruption scandals linked to his party.
If a deal had not been reached by midnight on Sunday, Mas would have had to call fresh elections, which would have come as a major setback for the region's independence drive.
He told a press conference today that he was stepping aside in order to strike the agreement with the CUP.
Replacing him as candidate will be Carles Puigdemont, head of the association of pro-independence municipalities, Mas added.
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