The 'Khan Sajna' group has parted ways from the Tehrik-e-Taliban Pakistan (TTP) led by Maulana Fazlullah due to its involvement in criminal activities and policy of bombing public places, Azam Tariq, former TTP spokesman and a member of its powerful shura (council), said.
"We announce our defection from the Tehreek-e-Taliban Pakistan, we have chosen our Khalid Mehsud as the new leader for South Waziristan," Tariq said.
"Khalid Mehsud" known as "Khan Said Sajna" was a contender for the TTP's leadership after its former chief Hakimullah Mehsud was killed in a US drone strike last year.
The break-away faction belongs to the Mehsud tribe, considered to be one of the most important and powerful of the various groups that comprise the TTP.
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Tariq said there were differences within the rebels over the issue of peace talks with the government, which are currently stalled. He said the TTP needs reforms.
He had removed Sajna as chief of South Waziristan over fighting with another group led by Shehyar Mehsud but Sajna refused to relinquish his position.
More than 50 rebels were killed due to fighting between Sajna and Shehyar groups in the previous weeks.
It is not know whether intelligence agencies had a hand in the split.
Pakistani air force jets last week pounded Taliban targets in the country's restive tribal region near the Afghan border.