Sarath Fonseka declared he would stand against President Mahinda Rajapakse, who claims credit for the defeat of Tamil Tigers in May that ended the island's bloody ethnic conflict.
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Fonseka told reporters he would reduce the powers vested in the presidential office and criticised Rajapakse for running the country as a "family empire."
"If I am elected, I will scrap the executive presidency within six months, hold parliamentary elections and adopt a new constitution that will uphold democracy, social justice and media freedoms," Fonseka told reporters.
He said he was moving into politics because corruption was preventing Sri Lankans from benefiting from the success that military forces had secured under his command.
"The peace dividend is not being achieved by the people of this country due to corruption, which is at a peak," Fonseka said, adding that the country's two largest opposition parties had persuaded him to run for office.
"Sri Lanka had suffered violence and indign