Election to the constituency here was necessitated by the death of sitting member and former Chief Minister J Jayalalithaa in December last.
According to a party statement here, the decision to field Dinakaran was taken at the AIADMK parliamentary board meeting, which is headed by its General Secretary Sasikala.
Dinakaran, nephew of Sasikala, is a former MP.
This will be the first election faced which the AIADMK will face post Jayalalithaa's death and the bitter rift following a revolt by expelled leader and former Chief Minister O Panneerselvam.
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Dinakaran, who was expelled from the AIADMK in 2011, was re-inducted into the party last month by Sasikala after he expressed regret for his alleged anti-party activities.
Subsequently, he was appointed as the party's Deputy General Secretary making him the second-in command after Sasikala, who is now serving a jail term in Bengaluru, in connection with the Rs 66 crore disproportionate assets case.
(REOPENS MDS2)
"I want to take forward the legacy of Amma (Jayalalithaa) and continue the work done and left behind by her," he said.
Stating that he was contesting the bypoll following a decision taken by the party's Parliamentary Board, he insisted that DMK was AIADMK's main rival and welcomed the support of other parties.
"DMK is our rival and that is the policy of (party founder the late) MG Ramachandran and Amma. I am contesting from RK Nagar to prevent a DMK win and therefore will accept the support of others, whether it be MDMK, DMDK, BJP or even Congress," he said.
He described as "imagination" speculation that he will take over from Palaniswami in the case of being elected to the state Assembly.
Dinakaran also refused to respond to a question on DMK approaching the Election Commission with a plea to transfer City Police Commissioner S George alleging he was acting in favour of the ruling AIADMK.
Replying to a query on expelled leader Panneerselvam, Dinakaran said he was carrying on a campaign against the party with a view to "mislead" people and termed him as a "great actor."