The announcement came after top AGP leadership had an hour-long discussion with BJP President Amit Shah here.
"We had a meeting with the BJP President where we have decided to contest the coming Assam Assembly polls together," Mahanta told PTI.
The former two-time Chief Minister said a formal announcement about the alliance will be made by the two parties in a day or two where the number of seats to be contested by them would be made public.
Bora said that a Common Minimum Programme will be announced by the two parties soon.
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"The alliance will dethrone the corrupt and non- performing Tarun Gogoi-led Congress government in Assam," he said.
Election to the 126-member Assam Assembly is expected to be held in April-May.
BJP and AGP had an alliance in 2009 Lok Sabha polls in which the saffron party bagged four seats and AGP just one.
The two parties considered an alliance ahead of the 2014 Lok Sabha polls but the regional party had backed off, apparently on the assumption that such an understanding would not be beneficial for AGP.
Mahanta became Assam's Chief Minister for the first time at the age of 32 in 1985 after leading a six-year-old agitation against illegal migration from Bangladesh as president of All Assam Students Union.
Mahanta was Assam's Chief Minister between 1985 and 1990 and again from 1996 to 2001.
Sonowal was in AGP before joining BJP about four years ago. He was an AGP MP between 2004-2009.