She is expected to be sworn-in as the third Chief Minister of the state within two months on Tuesday.
The name of 62-year-old Sasikala as AIADMK Legislature Party leader was proposed by Chief Minister O Panneerselvam at a meeting of party MLAs at the party headquarters here.
The MLAs unanimously elected her as their leader, enabling her to take over the reins from Panneerselvam.
Prior to the party meeting on a day of fast-pased developments, Panneerselvam visited the Poes Garden Residence to meet Sasikala.
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"It was Panneerselvam who had first persuaded me to become the Chief Minister and General Secretary as well when Jayalalithaa passed away," Sasikala told party legislators in her acceptance speech.
She said the development has come "shattering the expectation of our political opponents that there will be a split in the party after the demise of our Amma (Jayalalithaa)."
Sasikala had a special word of praise for the Panneerselvam, stating "whenever the party faced tough times and whenever there were difficulties in Amma becoming the Chief Minister, it was our dear brother Panneerselvam who has been loyal."
Sasikala said it was Panneerselvam who had for the first
time urged her to become both the party General Secretary and Chief Minister after the demise of Jayalalithaa.
"I was, however, not in a mood to listen to anything then due to the passing away of Amma," she said, adding, she agreed to become the party General Secretary after leaders and cadres persuaded her to do so to fulfil the ideals of Jayalalithaa.
Recalling that party leaders and workers had been urging her that "both the party general secretary and Chief Minister should be one and the same person (Sasikala), she said "I am accepting it."
Panneerselvam was the stop gap Chief Minister twice, first time when Jayalalithaa was unseated following a Supreme Court order in 2001 and when she was convicted in a disproportionate assets case in 2014.
When Jayalalithaa was at the helm, Sasikala was considered to yield a huge clout behind the scenes. After taking charge of the party, she had pledged to take forward the legacy of the former Chief Minister.
Ever since Jayalalithaa's death, there has been a clamour that Sasikala should follow the earlier practice of both the party General Secretary and the Chief Minister's post being vested with the same person.
In December last year, four state ministers had asked Sasikala to become the Chief Minister, besides AIADMK General Secretary.
A resolution to this effect was passed at a meeting of Tirunelveli Urban Jaya Peravai (Forum), led by state AIADMK secretary and revenue minister R B Udhayakumar on December 17.
Two days back, Sasikala had appointed senior leaders, including some former Ministers and a former Mayor, to key party posts.
When she addressed the party legislators, Sasikala was
clad in the signature green sari and blouse emulating the late Jayalalithaa.
It is now a mere formality for Panneerselvam to resign from the Chief Ministership, paving the way for Sasikala to assume the top post.
Stalin claimed Sasikala was not Jayalalithaa's choice for position either in the government or in the party.
Speaking to reporters at Tiruvarur, the DMK leader recalled that whenever Jayalalithaa could not be at the helm as when she was indisposed since last September and after being convicted in a disproportionate assets case, she chose Panneerselvam to head the government.
He said his "party will face it in the upcoming elections (civic) in a democratic manner."
"I believe she will factor in people's opinions on this change," he said in a statement.