“I intend to lead us to victory in the upcoming elections and to establish the next government in the spirit of Likud,” the former premier told a news conference in Tel Aviv.
“The Likud needs a leader who can unite the ranks, who can rebuild the ruins and take the Likud to victory, and afterwards, to lead the country in the spirit of our principles.”
The announcement comes less than a month after Mr Netanyahu quit as finance minister in protest at Mr Sharon’s decision to unilaterally pull troops and settlers out of the occupied Gaza Strip.
Mr Netanyahu said he would not sanction any more pullouts without a nationwide referendum.
He accused Mr Sharon of turning Gaza into a haven for extremists such as the Lebanese Shi’ite militia Hezbollah and the radical Palestinian movement Hamas.
“Sharon gave and gave, and gave some more, the Palestinians got more and more and more,” said Mr Netanyahu.
“What did we get in return? The answer is: nothing, nothing and nothing.
“In the past, I proved my ability to conduct forceful negotiations with the Palestinians. I laid down a principle which is known to you all — the principle of reciprocity. They give, they get. If they don’t give, they won’t get.”
Mr Netanyahu was flanked at the launch by a clutch of Likud MPs, including former foreign minister David Levy.
Mr Netanyahu, who at 55 years old is 22 years younger than Mr Sharon, was premier from 1996 to 1999 before being roundly defeated by the centre-left Labour party.
He managed to rebuild his reputation as finance minister under Mr Sharon but quit on August 7 in protest at the plan to pull settlers out of Gaza and four small West Bank enclaves, an operation which was completed a week ago.
Likud’s central committee is due to meet on September 25 and is expected to set a November 22 date for a leadership primary vote.