TRS President and Telangana Chief Minister K Chandrasekhar Rao, whose resignation necessitated the bypoll in his native district, announced the candidature of Reddy, a release said here.
Reddy, who is reportedly into transport business, was chosen over G Deviprasad, leader of Telangana employees unions.
Deviprasad, who played a key role in the Telangana statehood agitation by the government employees, was a major contender for the TRS ticket.
The release said Deviprasad would be made a member of the Legislative Council soon. The Chief Minister has decided to utilise the services of Deviprasad as a bridge between the Telangana government and the employees, it said.
Opposition Congress has decided to go it alone in the bypoll and former Minister Sunita Laxma Reddy is said to be the front-runner for the party's ticket.
NDA partners, TDP and BJP, have decided that the saffron party would contest the by-election on behalf of the alliance.
The Medak bypoll is likely to witness a keen contest with the TRS seeking to retain the seat, vacated by its chief, and the Congress and TDP-BJP combine making a determined bid to wrest the constituency from the ruling party.