Former federal minister Fahim heads the Pakistan Peoples Party Parliamentarians, the name under which the party is registered with the Election Commission.
He will be Pakistan Peoples Party's candidate for the election to be held in the National Assembly on June 5.
However, the PPP's move will not affect Sharif as the PML-N has a majority in the 342-member lower house of the Parliament.
PML-N leaders said Sharif's election for an unprecedented third term as premier will be a mere formality.
When the PPP emerged the single largest party in the 2008 polls, its prime ministerial candidate, Yousuf Raza Gilani, was elected unopposed in the National Assembly.
However, most PPP leaders were of the view that their party would be further marginalised if it goes soft on the PML-N at the centre.
They believe Imran Khan's Pakistan Tehrik-e-Insaf is a potential threat to the PPP and may deprive it of its role as opposition at the centre if the PPP continues its reconciliation policy and becomes a "friendly opposition".
"My party is the second largest party with 38 seats in the National Assembly and it is not going to be subservient to any other party," he said.
The Tehrik-e-Insaf, the third largest party in parliament with 31 seats, has fielded Javed Hashmi for the slot of premier.
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