At an evening news conference, Sharon told reporters he only made his final decision to abandon the Likud Party on Sunday night, the Jerusalem Post reported.
"What's happening now is that the life inside this body is totally unacceptable," Sharon said. "I cannot accept what's going on there."
The new party has been given the working name National Responsibility.
Saying that serving the country is more important than political infgihting, Sharon said that his two goals are negotiating peace with the Palestinians and improving the lives of Israelis.
Earlier Monday, Sharon asked President Moshe Katsav to dissolve the Knesset, and Likud faction leader Gideon Sa'ar announced plans to have the Knesset dissolve itself. If that happens, instead of a presidential dissolution, Sharon would be unable to appoint new cabinet ministers before the election, leaving him with only six -- his allies from Likud -- and threatening his ability to govern.
While Sa'ar appears to have the votes to push the dissolution through, a Sharon ally has threatened a filibuster.