Kulsoom Nawaz Sharif will be the candidate of the Pakistan Muslim League-Nawaz party in the by-election to be held in about 45 days, Mr Sharif's adviser Asif Kirmani told reporters in Lahore.
The announcement comes as Nawaz Sharif leads a "homecoming" caravan to Lahore that has drawn thousands of supporters. Mr Sharif on Thursday described his removal last month by Pakistan's top court over undeclared income as "an insult to the mandate of 200 million voters".
The verdict marked a political victory for opposition leader Imran Khan, a former cricket star who led a campaign demanding Mr Sharif's wealth be investigated. Mr Khan himself is facing a court case alleging undeclared assets.
The decision to put forward Nawaz Sharif's wife is in keeping with Pakistan's tradition of dynastic politics and also indicates the former premier will likely remain involved behind the scenes.
Mr Sharif's ruling party last week elected one of his loyalists, Shahid Khaqan Abbasi, as prime minister of Pakistan.
Party leaders have suggested Mr Abbasi will hold office until elections due next year, a reversal of earlier indications that Mr Sharif's younger brother, Shahbaz, would seek the vacant seat and later take over as prime minister.
Ms Kulsoom, who has never run for office, will be canvassing for votes in Nawaz Sharif's political stronghold inside Lahore's Walled City, where her husband has never lost. "We will, God willing, win this seat with a big majority," Muhammad Safdar, Mr Sharif's son-in-law who is also a member of parliament, said as he stood beside Mr Kirmani.
Ms Kulsoom has always stood by her husband throughout a political career that has seen him elected and then ousted as prime minister three times. In 2000, when Pakistan's army chief General Pervez Musharraf removed Nawaz Sharif in a military coup, Ms Kulsoom led protests in Lahore.
In one of the protests, she locked herself in a car for several hours, refusing to let police arrest her. Police had to tow her car and then lift it with a crane to drive miles back to her home.
(By Mubasher Bukhari and Asif Shahzad. Writing by Asif Shahzad and Kay Johnson; Editing by Nick Macfie)