Announcement of the new party was made at a rally at Jind, considered as the political heartland of the state.
The flag of the new political outfit was unveiled at a well-attended rally here by Ajay Chautala's wife and MLA Naina Chautala along with senior leader K C Bangar, former chairman of the Haryana Public Service Commission.
His two sons - Hisar MP Dushyant Chautala and Digvijay Chautala - were among those present.
The name of the new party begins with 'Jannayak', a reference to former deputy prime minister Devi Lal, with various speakers at the rally vowing to follow his ideals.
Over recent weeks, the feud saw the expulsion of Ajay Chautala and his sons, Dushyant Chautala and Digvijay Chautala, from the Haryana-based party headed by Om Prakash Chautala.
The two young leaders were shunted out after their slogan-shouting supporters allegedly targeted Abhay Chautala at an INLD rally in Gohana in October.
In the feud, Om Prakash Chautala, the son of Devi Lal, threw his weight behind his younger son Abhay Chautala.
Meanwhile, Abhay Chautala, who is also Leader of Opposition, held a meeting of party's state executive including his MPs, MLAs and state executive members in Chandigarh on Sunday.
Earlier on November 17, when Ajay Chautala, who was then out on parole, had convened a meeting at Jind and on that day, Abhay Chautala too had called a meeting of the INLD at Chandigarh, ostensibly to keep his flock together and ensure that his members did not go to Jind.
Abhay Chautala had earlier said that his elder brother was blinded by his love for his sons.
"One day they will have to apologise before (Om Prakash) Chautala saheb and admit that they made a big mistake," he had said, referring to alleged hooliganism at the INLD rally by supporters of his two nephews.