"In total agreement with the President of the Republic, I will resign from my role from tomorrow because I want to offer the French people a path in complete freedom", Valls said to applause from supporters in the Paris suburb of Evry, where he was mayor for over a decade.
On December 1, unpopular French Socialist President Francois Hollande announced he would not seek reelection, which Valls called "a choice of a statesman" and added that "the dignity of this decision commands respect".
The new prime minister is expected this afternoon at the National Assembly's weekly government question session.
The combative Valls meanwhile will go up against at least seven other candidates for the nomination of the mainstream left in a two-round primary on January 22 and 29.
Valls will face other contenders in the Socialist primary next month.
However polls shows that while Valls would win that contest, he would finish behind far-right candidate Marine Le Pen and the rightwing candidate Francois Fillon in the first round of the presidential election in April, failing to make the runoff.
Political opponents were quick to mock his candidacy, with Florian Philippot, FN number two saying: "Valls is a jumped-up version of Hollande, less rounded in character".
Valls said Friday he was determined to "defend the legacy" of Hollande, despite opinion polls showing that his former boss is the least popular French president for almost 60 years.
Spanish-born Valls, whose family fled Franco's dictatorship to France when he was a teenager, faces an uphill battle to unite his camp.